<div class="phx-topic abstract-wrapper">US maritime regulators’ decision to add the multipurpose vessel operator to the controlled-carrier list comes amid a wider US-China trade dispute. </div>

US maritime regulators’ decision to add the multipurpose vessel operator to the controlled-carrier list comes amid a wider US-China trade dispute.

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<div class="phx-topic">US maritime regulators’ decision to add the multipurpose vessel operator to the controlled-carrier list comes amid a wider US-China trade dispute. US maritime regulators have added Chipolbrok, a multipurpose vessel operator 50/50 owned by the governments of China and Poland, to a list of entities deemed to be under Chinese government control, triggering extra scrutiny of the carrier. The move comes amid increasingly fractious relations between the US and China, with both countries imposing tit-for-tat tariffs and the US proposing port fees on commercial ships built in China. Other carriers on the Federal Maritime Commission’s (FMC’s) controlled-carrier list include China-based Cosco Shipping and its Hong Kong-based subsidiary OOCL, as well as South Korea-based HMM. The firm, which takes its name from its official title — the Chinese-Polish Joint Stock Shipping Company — was initially designated as a controlled carrier in November but confirmation was delayed while the company appealed the decision. Upholding the original ruling in a three-page determination this week, the FMC said a comprehensive review of the company’s ownership structure found that the Chinese government “exerts more control over the corporate structure and commercial activities of Chipolbrok than the Polish partner.” “For example, the company’s office in Shanghai is a headquarters office, while the Polish office is a branch office,” the FMC said in its determination. “The Chinese portion of the company is also more complex than the Polish one, with more subsidiaries and more executives. In addition, Cosco Shipping Group, a Chinese-controlled carrier, provides funding and other support to Chipolbrok.” Controlled carriers are subject to enhanced regulatory oversight on the basis that government-subsidized shipping firms could undercut privately owned carriers to gain access to the US market or disrupt trade, the FMC said. Chipolbrok has an owned fleet of 31 multipurpose vessels ranging in size up to 62,000 deadweight tons (dwt) that operate semi-liner and tramp services and four 38,000-dwt ships on order for delivery starting next year. In the US, the firm operates through Houston-based Chipolbrok Americas, formed in 2004. Recent shipments have included components for LNG facilities along the Gulf of Mexico, wind power equipment and breakbulk cargoes including steel coils. Oslo, Norway-headquartered maritime consultancy Esgian said 19% of Chipolbrok’s total vessel sailings last year were US-related, of which 15% were between the US and Mexico. Chipolbrok representatives in the US and Europe were not immediately available for comment. Contact Keith Wallis at <a href="keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

US maritime regulators’ decision to add the multipurpose vessel operator to the controlled-carrier list comes amid a wider US-China trade dispute. US maritime regulators have added Chipolbrok, a multipurpose vessel operator 50/50 owned by the governments of China and Poland, to a list of entities deemed to be under Chinese government control, triggering extra scrutiny of the carrier. The move comes amid increasingly fractious relations between the US and China, with both countries imposing tit-for-tat tariffs and the US proposing port fees on commercial ships built in China. Other carriers on the Federal Maritime Commission’s (FMC’s) controlled-carrier list include China-based Cosco Shipping and its Hong Kong-based subsidiary OOCL, as well as South Korea-based HMM. The firm, which takes its name from its official title — the Chinese-Polish Joint Stock Shipping Company — was initially designated as a controlled carrier in November but confirmation was delayed while the company appealed the decision. Upholding the original ruling in a three-page determination this week, the FMC said a comprehensive review of the company’s ownership structure found that the Chinese government “exerts more control over the corporate structure and commercial activities of Chipolbrok than the Polish partner.” “For example, the company’s office in Shanghai is a headquarters office, while the Polish office is a branch office,” the FMC said in its determination. “The Chinese portion of the company is also more complex than the Polish one, with more subsidiaries and more executives. In addition, Cosco Shipping Group, a Chinese-controlled carrier, provides funding and other support to Chipolbrok.” Controlled carriers are subject to enhanced regulatory oversight on the basis that government-subsidized shipping firms could undercut privately owned carriers to gain access to the US market or disrupt trade, the FMC said. Chipolbrok has an owned fleet of 31 multipurpose vessels ranging in size up to 62,000 deadweight tons (dwt) that operate semi-liner and tramp services and four 38,000-dwt ships on order for delivery starting next year. In the US, the firm operates through Houston-based Chipolbrok Americas, formed in 2004. Recent shipments have included components for LNG facilities along the Gulf of Mexico, wind power equipment and breakbulk cargoes including steel coils. Oslo, Norway-headquartered maritime consultancy Esgian said 19% of Chipolbrok’s total vessel sailings last year were US-related, of which 15% were between the US and Mexico. Chipolbrok representatives in the US and Europe were not immediately available for comment. Contact Keith Wallis at keithwallis@hotmail.com .

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FMC to scrutinize Chipolbrok, citing Chinese government control

<div class="phx-topic abstract-wrapper">In addition to various ongoing supply chain disruptions that US agricultural shippers face, they must now contend with the highly volatile tariff environment that is forcing them to seek new markets for their products.</div>

In addition to various ongoing supply chain disruptions that US agricultural shippers face, they must now contend with the highly volatile tariff environment that is forcing them to seek new markets for their products.

<div class="phx-topic">US exporters of agricultural products will have to navigate a minefield of tariffs, supply chain challenges and phytosanitary restrictions through the balance of 2025 as they seek to protect access to existing overseas markets and develop new ones. Shippers of grains, cotton, hay, fruits, nuts and forest products will face, by far, their greatest obstacles in China, which is engaged in a full-blown trade dispute with the Trump administration. China, still the top destination for US agricultural exports, is deploying a multi-faceted attack on US ag shippers in retaliation for the huge tariffs the US has implemented on imports from China. In addition to levying tariffs as high as 125% on imports of US agricultural and forest products, China is restricting or eliminating imports of certain products due to phytosanitary concerns. US log exports are a prime example, said Hayden Swofford, independent administrator of the Pacific Northwest Asia Shippers Association, whose members include forest products shippers. China had been tariffing forest products from the US at 5% to 12.5% based on the origin points in the US, but then in March it banned the importation of all US forest products due to concerns over the alleged infestation of bark beetles. “China plays this game at multiple levels,” Swofford said. Containerized exports of US agricultural products totaled 1.5 million TEUs in 2024. That was up 6.2% from 2023 but down 2.4% from 2019, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. In the first two months of 2025, shipments have slipped 6.4% compared with the same period last year.<div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="60c6cf3b-836b-442c-b891-d423954185a8"></dynamic-object></div>China’s share of total US ag exports in 2024 was 15.8%, down from just under 21% in 2023 and the most recent five-year high of 23.7% in 2022, according to PIERS. Still, “Ag shippers are more exposed to China than other sectors,” said Paul Bingham, director of transportation consulting for S&amp;P Global Market Intelligence. In its ongoing tariff standoff with the US, China is targeting specific US export sectors but oftentimes does not tariff those same products from other countries that may be direct competitors of the US, giving other countries a competitive pricing advantage, Bingham said. That scenario played out in 2018 when President Donald Trump levied tariffs on imports from China, which responded with tariffs on US ag products. US hay exporters had to seek markets in other countries to replace the sales it lost in China, said Scot Courtright, COO of Washington state-based Courtright Enterprises, which specializes in the logistics and export of forage. A shift in destination markets can result in logistical problems, Courtright said. European hay exporters seven years ago increased their shipments to China, but as a result they had less hay to ship to their existing markets in the Middle East. So US hay exporters stepped up their exports to the Middle East, Courtright said. But as China has extensive liner services from the US, destinations in the Middle East do not. “Getting vessel space to the Middle East is difficult, and the shipment can be transshipped two or three times,” Courtright said. <h3>Ag shippers may lose their largest market </h3>Tariff and trade frictions between the US and China will be especially harmful for cotton exporters, said Buddy Allen, president and CEO of the American Cotton Shippers Association. “It is possible that China can go from being the largest market for US cotton to the smallest,” Allen said. And soybean exporters now face a major issue of replacing China, the largest market for US soybean exports, with multiple, smaller shipments to other countries, said Mike Steenhoek, executive director of the Soybean Transportation Coalition. “China is number one, but it’s less viable now,” he said. Other viable markets for US soybean exporters are Japan, South Korea, the Philippines, Indonesia, Vietnam, Thailand, Mexico and North Africa, Steenhoek said. Brazil and Argentina are the largest competitors of US soybean exporters in the China market. <h3>Ag shippers still face supply chain issues </h3>US agricultural shippers last year faced a host of supply chain issues, including draft restrictions at the Panama Canal and attacks on commercial vessels in the Red Sea by Houthi militants, forcing the diversion of most liner traffic around southern Africa. Shippers also had to contend with the threat of a strike by the International Longshoremen’s Association (ILA) against employers at East and Gulf coasts, in addition to a brief work stoppage in early October. Importers and exporters diverted discretionary cargo to West Coast ports, which resulted in extended rail container dwell times and congestion in Seattle-Tacoma and Los Angeles-Long Beach. And carriers continue to struggle with poor on-time reliability to both coasts, which makes it difficult for US exporters to keep to the delivery schedules their overseas buyers rely on for supply chain reliability, Steenhoek said. “The power of predictability is compromised,” Steen Hoek said. “I would rather that service be consistently good than occasionally exceptional.” In addition to unreliability on the ocean side, cotton shippers face continually changing delivery deadlines for their loaded containers at marine terminals and inland hubs. That uncertainty not only disrupts supply chains but also results in tangible costs for exporters, said Mike Symonanis, director of strategic network at Louis Dreyfus. “We are live-load shippers,” Symonanis said. Agricultural shippers said that in the volatile environment of tariffs and counter-tariffs, they are stepping up their lobbying in Washington through trade organizations to ensure that Congress and the White House understand the importance of ag exports to the US economy. “This is our first, second and third objective,” said the American Cotton Shippers Association’s Allen. Contact Bill Mongelluzzo at <a href="bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

US exporters of agricultural products will have to navigate a minefield of tariffs, supply chain challenges and phytosanitary restrictions through the balance of 2025 as they seek to protect access to existing overseas markets and develop new ones. Shippers of grains, cotton, hay, fruits, nuts and forest products will face, by far, their greatest obstacles in China, which is engaged in a full-blown trade dispute with the Trump administration. China, still the top destination for US agricultural exports, is deploying a multi-faceted attack on US ag shippers in retaliation for the huge tariffs the US has implemented on imports from China. In addition to levying tariffs as high as 125% on imports of US agricultural and forest products, China is restricting or eliminating imports of certain products due to phytosanitary concerns. US log exports are a prime example, said Hayden Swofford, independent administrator of the Pacific Northwest Asia Shippers Association, whose members include forest products shippers. China had been tariffing forest products from the US at 5% to 12.5% based on the origin points in the US, but then in March it banned the importation of all US forest products due to concerns over the alleged infestation of bark beetles. “China plays this game at multiple levels,” Swofford said. Containerized exports of US agricultural products totaled 1.5 million TEUs in 2024. That was up 6.2% from 2023 but down 2.4% from 2019, according to PIERS, a sister product of the Journal of Commerce within S&P Global. In the first two months of 2025, shipments have slipped 6.4% compared with the same period last year. China’s share of total US ag exports in 2024 was 15.8%, down from just under 21% in 2023 and the most recent five-year high of 23.7% in 2022, according to PIERS. Still, “Ag shippers are more exposed to China than other sectors,” said Paul Bingham, director of transportation consulting for S&P Global Market Intelligence. In its ongoing tariff standoff with the US, China is targeting specific US export sectors but oftentimes does not tariff those same products from other countries that may be direct competitors of the US, giving other countries a competitive pricing advantage, Bingham said. That scenario played out in 2018 when President Donald Trump levied tariffs on imports from China, which responded with tariffs on US ag products. US hay exporters had to seek markets in other countries to replace the sales it lost in China, said Scot Courtright, COO of Washington state-based Courtright Enterprises, which specializes in the logistics and export of forage. A shift in destination markets can result in logistical problems, Courtright said. European hay exporters seven years ago increased their shipments to China, but as a result they had less hay to ship to their existing markets in the Middle East. So US hay exporters stepped up their exports to the Middle East, Courtright said. But as China has extensive liner services from the US, destinations in the Middle East do not. “Getting vessel space to the Middle East is difficult, and the shipment can be transshipped two or three times,” Courtright said. Ag shippers may lose their largest market Tariff and trade frictions between the US and China will be especially harmful for cotton exporters, said Buddy Allen, president and CEO of the American Cotton Shippers Association. “It is possible that China can go from being the largest market for US cotton to the smallest,” Allen said. And soybean exporters now face a major issue of replacing China, the largest market for US soybean exports, with multiple, smaller shipments to other countries, said Mike Steenhoek, executive director of the Soybean Transportation Coalition. “China is number one, but it’s less viable now,” he said. Other viable markets for US soybean exporters are Japan, South Korea, the Philippines, Indonesia, Vietnam, Thailand, Mexico and North Africa, Steenhoek said. Brazil and Argentina are the largest competitors of US soybean exporters in the China market. Ag shippers still face supply chain issues US agricultural shippers last year faced a host of supply chain issues, including draft restrictions at the Panama Canal and attacks on commercial vessels in the Red Sea by Houthi militants, forcing the diversion of most liner traffic around southern Africa. Shippers also had to contend with the threat of a strike by the International Longshoremen’s Association (ILA) against employers at East and Gulf coasts, in addition to a brief work stoppage in early October. Importers and exporters diverted discretionary cargo to West Coast ports, which resulted in extended rail container dwell times and congestion in Seattle-Tacoma and Los Angeles-Long Beach. And carriers continue to struggle with poor on-time reliability to both coasts, which makes it difficult for US exporters to keep to the delivery schedules their overseas buyers rely on for supply chain reliability, Steenhoek said. “The power of predictability is compromised,” Steen Hoek said. “I would rather that service be consistently good than occasionally exceptional.” In addition to unreliability on the ocean side, cotton shippers face continually changing delivery deadlines for their loaded containers at marine terminals and inland hubs. That uncertainty not only disrupts supply chains but also results in tangible costs for exporters, said Mike Symonanis, director of strategic network at Louis Dreyfus. “We are live-load shippers,” Symonanis said. Agricultural shippers said that in the volatile environment of tariffs and counter-tariffs, they are stepping up their lobbying in Washington through trade organizations to ensure that Congress and the White House understand the importance of ag exports to the US economy. “This is our first, second and third objective,” said the American Cotton Shippers Association’s Allen. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

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Trans-Pacific

Uncertain trade environment especially fraught for US ag shippers

<div class="phx-topic abstract-wrapper">The US Trade Representative (USTR) laid out actions to counter China’s maritime dominance that could put Cosco Shipping and subsidiary OOCL on the hook for millions when their ships call the US. </div>

The US Trade Representative (USTR) laid out actions to counter China’s maritime dominance that could put Cosco Shipping and subsidiary OOCL on the hook for millions when their ships call the US.

<div class="phx-topic">The US Trade Representative (USTR) has narrowed the scope of its tariffs against China’s maritime industry to a fee based on the cargo capacity or container volume of Chinese-operated and -built ships entering US ports. The more targeted actions follow industry warnings that earlier proposals <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">would increase costs for US shippers and pose an existential threat to smaller ports</a>, but China-based ocean carriers could still face millions in fees under the tariffs. In its list of tariff actions that take effect Oct. 14, the USTR said Chinese ocean carriers will be subject to a fee of $50 per net ton of capacity upon arrival at a US port. The fee will go up to $80 after one year, rising each year before topping out at $140 in 2028. Net tonnage measures a ship’s overall cargo capacity, regardless of vessel type. The fee will only be charged at the first port of call on a vessel string and will not stack on top of other port calls. The fee will only be charged five times per year on each vessel. Ocean carriers based outside of China operating Chinese-built ships will face a fee based on either net tonnage or container volume, whichever is higher. Ships built in other countries will not face the same fees, nor will fees be assessed based on the percentage of Chinese-built ships in a carrier’s fleet or orders at Chinese shipyards. The tonnage fee for non-Chinese carriers starts at $18, escalating to $23 by April 2026 and topping out at $33 in 2028. The per-container fee starts at $120 and rises to $153 next year and $250 in 2028. Non-Chinese ocean carriers will be able to waive the fee if they take delivery of a US-built ship of at least the same size within three years. The fees will not apply to Chinese-built ships in US-flag fleets, container ships that are 4,000 TEUs or smaller, voyages of less than 2,000 nautical miles or Chinese-built ships owned by US-based carriers. The capacity-based tariffs come after a series of proposals that included fees of up to $1.5 million based on US port calls by Chinese carriers and similar fees on non-Chinese ocean carriers with Chinese-built ships in their fleets and orders at Chinese shipyards. Other proposals included an export cargo preference for US-built ships. After two days of hearings, <a href="https://www.joc.com/article/ustrs-china-tonnage-tax-would-squeeze-smaller-trades-stakeholders-5967638">the USTR said it wanted to reduce the potential impact on US shippers</a>, particularly exporters and dry-bulk shippers. Still, the USTR plans tariffs based on the capacity of China-built ships and will still charge fees on that country’s ocean carriers. The goal of the fees is “to further disincentivize use of Chinese shipping services,” the USTR said. <h3>Cosco, OOCL in crosshairs </h3>The USTR’s fees will have the largest impact on ships operated by Cosco Shipping and its subsidiary Orient Overseas Container Line (OOCL). For example, the 13,092-TEU Cosco Hope made five calls to the Port of New York and New Jersey over the last 12 months as part of the Ocean Alliance’s Liberty Bridge service from Europe to the US East Coast, according to Sea-web, a sister company of the Journal of Commerce within S&amp;P Global. With a net tonnage of 63,544 tons, according to Sea-web, the Cosco Hope would have incurred a fee of $3.2 million for each port call. A similar capacity ship operated by a non-Chinese carrier would result in a fee of about $1 million per call. The 13,386-TEU Cosco Italy made 10 calls to the Port of Long Beach during the same period as part of Ocean Alliance’s Hibiscus Express service, Sea-web data show. Its net tonnage would put its fee at $3.3 million per call. The 16,828-TEU OOCL Bauhinia made three port calls to Long Beach as part of the South China Pacific Service. Its net tonnage would result in a fee of $2.8 million per call, according to the USTR’s formula. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The US Trade Representative (USTR) has narrowed the scope of its tariffs against China’s maritime industry to a fee based on the cargo capacity or container volume of Chinese-operated and -built ships entering US ports. The more targeted actions follow industry warnings that earlier proposals would increase costs for US shippers and pose an existential threat to smaller ports , but China-based ocean carriers could still face millions in fees under the tariffs. In its list of tariff actions that take effect Oct. 14, the USTR said Chinese ocean carriers will be subject to a fee of $50 per net ton of capacity upon arrival at a US port. The fee will go up to $80 after one year, rising each year before topping out at $140 in 2028. Net tonnage measures a ship’s overall cargo capacity, regardless of vessel type. The fee will only be charged at the first port of call on a vessel string and will not stack on top of other port calls. The fee will only be charged five times per year on each vessel. Ocean carriers based outside of China operating Chinese-built ships will face a fee based on either net tonnage or container volume, whichever is higher. Ships built in other countries will not face the same fees, nor will fees be assessed based on the percentage of Chinese-built ships in a carrier’s fleet or orders at Chinese shipyards. The tonnage fee for non-Chinese carriers starts at $18, escalating to $23 by April 2026 and topping out at $33 in 2028. The per-container fee starts at $120 and rises to $153 next year and $250 in 2028. Non-Chinese ocean carriers will be able to waive the fee if they take delivery of a US-built ship of at least the same size within three years. The fees will not apply to Chinese-built ships in US-flag fleets, container ships that are 4,000 TEUs or smaller, voyages of less than 2,000 nautical miles or Chinese-built ships owned by US-based carriers. The capacity-based tariffs come after a series of proposals that included fees of up to $1.5 million based on US port calls by Chinese carriers and similar fees on non-Chinese ocean carriers with Chinese-built ships in their fleets and orders at Chinese shipyards. Other proposals included an export cargo preference for US-built ships. After two days of hearings, the USTR said it wanted to reduce the potential impact on US shippers , particularly exporters and dry-bulk shippers. Still, the USTR plans tariffs based on the capacity of China-built ships and will still charge fees on that country’s ocean carriers. The goal of the fees is “to further disincentivize use of Chinese shipping services,” the USTR said. Cosco, OOCL in crosshairs The USTR’s fees will have the largest impact on ships operated by Cosco Shipping and its subsidiary Orient Overseas Container Line (OOCL). For example, the 13,092-TEU Cosco Hope made five calls to the Port of New York and New Jersey over the last 12 months as part of the Ocean Alliance’s Liberty Bridge service from Europe to the US East Coast, according to Sea-web, a sister company of the Journal of Commerce within S&P Global. With a net tonnage of 63,544 tons, according to Sea-web, the Cosco Hope would have incurred a fee of $3.2 million for each port call. A similar capacity ship operated by a non-Chinese carrier would result in a fee of about $1 million per call. The 13,386-TEU Cosco Italy made 10 calls to the Port of Long Beach during the same period as part of Ocean Alliance’s Hibiscus Express service, Sea-web data show. Its net tonnage would put its fee at $3.3 million per call. The 16,828-TEU OOCL Bauhinia made three port calls to Long Beach as part of the South China Pacific Service. Its net tonnage would result in a fee of $2.8 million per call, according to the USTR’s formula. Contact Michael Angell at michael.angell@spglobal.com .

North American ports

Scaled back USTR port tariff to hit Chinese carriers hardest

<div class="phx-topic abstract-wrapper">While not ideal, the agreement reached at the IMO’s Maritime Environment Protection Committee at least puts a price on global emissions that will help narrow the yawning cost gap between fossil fuels and greener alternatives.</div>

While not ideal, the agreement reached at the IMO’s Maritime Environment Protection Committee at least puts a price on global emissions that will help narrow the yawning cost gap between fossil fuels and greener alternatives.

<div class="phx-topic">The compromise framework agreement that emerged from the International Maritime Organization’s (IMO’s) climate talks in London last week — despite deep divisions from member states — has been hailed as a decisive step forward for the decarbonization of shipping. Even though no universal carbon levy was agreed to at the IMO’s 83rd Maritime Environment Protection Committee (MEPC), shipping’s global carbon emissions will carry progressively increasing charges for the first time. “It’s a highly positive step towards achieving net-zero by the 2050 goal,” said Mark Brownstein, senior vice president of energy at climate campaigner Environmental Defense Fund. “While it’s not everything one could have wanted, it does put a price on carbon and has the potential to materially jumpstart the development and deployment of the next generation of fuels that the shipping industry is going to need,” Brownstein told the Journal of Commerce in an interview this week. The MEPC83 meeting at the IMO’s headquarters on the bank of the Thames River was a closely watched gathering of member states where the midterm measures centered around a fuel standard and pricing mechanism that were put forward for negotiation. But the meeting quickly exposed deep divisions between member states over a universal levy on carbon emissions, with <a href="https://www.joc.com/article/us-pulls-out-of-imo-climate-talks-threatens-retaliation-for-emissions-fees-5980359">the US refusing to attend</a> and even threatening retaliatory measures against any state imposing carbon fees on its ships. Brownstein played down the impact of the US’ refusal to participate. “It’s clear that from the actions last week that while the US has a voice, it does not have a veto,” he said. “The US is a relatively small player in the global shipping industry, and I think that that also was a factor here.” An agreement was finally reached on the compromise framework that places specific reduction targets on fuel intensity in container shipping and will result in financial penalties for non-compliance. <h3>Full lifecycle of fuel covered in new measures </h3>A key standard in the new regulation will be the fuel intensity used by global shipping, measured on a well-to-wake basis that covers the full lifecycle of the fuel. Starting in 2028, ships must lower their fuel intensity by a certain percentage compared with the baseline set in 2008. There are two tiers when it comes to the reduction factors, with the base target of Tier 1 set at a 4% reduction in 2028. A ship will pay $380 for every ton of greenhouse gas (GHG) emissions above the base reduction target. Tier 2 is the compliance target that is set at a 17% reduction in 2028. A ship falling between the base target and the compliance target will pay $100 for every ton of GHG emissions or buy remedial units. Any ships outperforming the compliance target will earn surplus units, which can be banked for two years or traded with non-compliant ships. Reduction targets will increase every year, with expectations of a 65% reduction in carbon intensity by 2040. “It’s hard to imagine a more challenging geopolitical backdrop to the negotiations, and hard not to see the influence of that in this result,” said Tristan Smith, associate professor at the London-based UCL Energy Institute. “But the outcome’s significance for the sector cannot be ignored and is a major step forward.” Rico Luman, senior economist at global bank ING, agreed that while the outcome did not please everyone, it was a significant step forward along shipping’s path to net-zero emissions by 2050. “The IMO wanted to adopt a pricing scheme because that was the aim of these sessions, and it looks like they used a [compromise proposal] to at least agree on something on a global level,” Luman told the Journal of Commerce. “This is the first global mechanism of pricing for CO2 emissions and now the IMO can try to build support to develop this to a broader market-based framework,” he added. <h3>Regulation key to delivering green fuels at viable prices </h3>A lot of work lies ahead to tighten the emissions-cutting measures and narrow the pricing gap between current fossil fuels and greener alternatives. But global regulation was key to delivering renewable fuels at a commercially viable price, according to World Shipping Council (WSC) President and CEO Joe Kramek. “Liner shipping has already moved to kick-start decarbonization, with nearly 1,000 renewable-capable ships to be on the water by 2030,” Kramek said in a statement after the conclusion of MEPC83. “Outcomes from the IMO mean global regulations can now begin to leverage the record industry investment to meet decarbonization targets.” As the ocean shipping sector digests the outcome of MEPC83 and the measures taken to decarbonize the industry, data released this week by rate benchmarking platform Xeneta and Marine Benchmark show carrier emissions reached a record high in 2024, driven up by the diversions around southern Africa. Global container emissions increased 14% last year to 240.6 million tons, surpassing the previous record of 218.5 million tons set in 2021. But the record-breaking statistic should not be used as a stick to beat the maritime freight industry, Xeneta said in its analysis of the emissions data, pointing instead to ships sailing longer distances around the Cape of Good Hope to avoid attacks by Houthi militants operating from Yemen that began to escalate in the Red Sea in late 2023. “A new record high is the inevitable outcome of these diversions, both in terms of the increase in transport work and the record-high demand of laden containers being moved in 2024 as shippers responded to the Red Sea crisis by frontloading imports,” Xeneta said in a statement. Ocean carriers’ overall transport work, a measurement of tons of cargo moved multiplied by nautical miles sailed, increased 18% in 2024. That was mostly the result of fleet growth of 26% between December 2023 and December 2024 for ships with capacity between 14,500 and 20,000 TEUs. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The compromise framework agreement that emerged from the International Maritime Organization’s (IMO’s) climate talks in London last week — despite deep divisions from member states — has been hailed as a decisive step forward for the decarbonization of shipping. Even though no universal carbon levy was agreed to at the IMO’s 83rd Maritime Environment Protection Committee (MEPC), shipping’s global carbon emissions will carry progressively increasing charges for the first time. “It’s a highly positive step towards achieving net-zero by the 2050 goal,” said Mark Brownstein, senior vice president of energy at climate campaigner Environmental Defense Fund. “While it’s not everything one could have wanted, it does put a price on carbon and has the potential to materially jumpstart the development and deployment of the next generation of fuels that the shipping industry is going to need,” Brownstein told the Journal of Commerce in an interview this week. The MEPC83 meeting at the IMO’s headquarters on the bank of the Thames River was a closely watched gathering of member states where the midterm measures centered around a fuel standard and pricing mechanism that were put forward for negotiation. But the meeting quickly exposed deep divisions between member states over a universal levy on carbon emissions, with the US refusing to attend and even threatening retaliatory measures against any state imposing carbon fees on its ships. Brownstein played down the impact of the US’ refusal to participate. “It’s clear that from the actions last week that while the US has a voice, it does not have a veto,” he said. “The US is a relatively small player in the global shipping industry, and I think that that also was a factor here.” An agreement was finally reached on the compromise framework that places specific reduction targets on fuel intensity in container shipping and will result in financial penalties for non-compliance. Full lifecycle of fuel covered in new measures A key standard in the new regulation will be the fuel intensity used by global shipping, measured on a well-to-wake basis that covers the full lifecycle of the fuel. Starting in 2028, ships must lower their fuel intensity by a certain percentage compared with the baseline set in 2008. There are two tiers when it comes to the reduction factors, with the base target of Tier 1 set at a 4% reduction in 2028. A ship will pay $380 for every ton of greenhouse gas (GHG) emissions above the base reduction target. Tier 2 is the compliance target that is set at a 17% reduction in 2028. A ship falling between the base target and the compliance target will pay $100 for every ton of GHG emissions or buy remedial units. Any ships outperforming the compliance target will earn surplus units, which can be banked for two years or traded with non-compliant ships. Reduction targets will increase every year, with expectations of a 65% reduction in carbon intensity by 2040. “It’s hard to imagine a more challenging geopolitical backdrop to the negotiations, and hard not to see the influence of that in this result,” said Tristan Smith, associate professor at the London-based UCL Energy Institute. “But the outcome’s significance for the sector cannot be ignored and is a major step forward.” Rico Luman, senior economist at global bank ING, agreed that while the outcome did not please everyone, it was a significant step forward along shipping’s path to net-zero emissions by 2050. “The IMO wanted to adopt a pricing scheme because that was the aim of these sessions, and it looks like they used a [compromise proposal] to at least agree on something on a global level,” Luman told the Journal of Commerce. “This is the first global mechanism of pricing for CO2 emissions and now the IMO can try to build support to develop this to a broader market-based framework,” he added. Regulation key to delivering green fuels at viable prices A lot of work lies ahead to tighten the emissions-cutting measures and narrow the pricing gap between current fossil fuels and greener alternatives. But global regulation was key to delivering renewable fuels at a commercially viable price, according to World Shipping Council (WSC) President and CEO Joe Kramek. “Liner shipping has already moved to kick-start decarbonization, with nearly 1,000 renewable-capable ships to be on the water by 2030,” Kramek said in a statement after the conclusion of MEPC83. “Outcomes from the IMO mean global regulations can now begin to leverage the record industry investment to meet decarbonization targets.” As the ocean shipping sector digests the outcome of MEPC83 and the measures taken to decarbonize the industry, data released this week by rate benchmarking platform Xeneta and Marine Benchmark show carrier emissions reached a record high in 2024, driven up by the diversions around southern Africa. Global container emissions increased 14% last year to 240.6 million tons, surpassing the previous record of 218.5 million tons set in 2021. But the record-breaking statistic should not be used as a stick to beat the maritime freight industry, Xeneta said in its analysis of the emissions data, pointing instead to ships sailing longer distances around the Cape of Good Hope to avoid attacks by Houthi militants operating from Yemen that began to escalate in the Red Sea in late 2023. “A new record high is the inevitable outcome of these diversions, both in terms of the increase in transport work and the record-high demand of laden containers being moved in 2024 as shippers responded to the Red Sea crisis by frontloading imports,” Xeneta said in a statement. Ocean carriers’ overall transport work, a measurement of tons of cargo moved multiplied by nautical miles sailed, increased 18% in 2024. That was mostly the result of fleet growth of 26% between December 2023 and December 2024 for ships with capacity between 14,500 and 20,000 TEUs. Contact Greg Knowler at greg.knowler@spglobal.com .

Transport, Trade and Regulation News

IMO deal on fuel intensity, pricing hailed as ‘major step forward’

<div class="phx-topic abstract-wrapper">Some – but not all – LTL trucking companies are handling more imports as US tariffs take effect, but the market is otherwise weak, carriers and analysts say.</div>

Some – but not all – LTL trucking companies are handling more imports as US tariffs take effect, but the market is otherwise weak, carriers and analysts say.

<div class="phx-topic">The rush of imports into the US ahead of the implementation of tariffs has boosted less-than-truckload (LTL) freight volumes — but unevenly, sources tell the Journal of Commerce. LTL carriers close to major seaports and US border crossings are picking up “pull-forward” freight, with national carriers likely seeing less of an uptick than some regional carriers. One of the hot markets is <a href="https://www.joc.com/article/tariff-uncertainty-pushing-up-transportation-costs-at-us-mexico-border-5984698">along the US-Mexico border</a>, which has seen waves of freight spurred by the US-Mexico trade dispute. “We have seen a noticeable but manageable increase in our cross-border traffic at our Texas border facilities,” said Kent Williams, executive vice president of sales and marketing at Averitt, a Tennessee-based regional trucking company. The increase has primarily been in LTL volume, Williams said, though Averitt’s other business lines — which include truckload and drayage — have enjoyed higher demand since the beginning of March as well. “We have been busy over the course of the past 30 to 45 days with respect to our dray and transload business at all our portside facilities across the south, likely due to the push to get ahead of the tariffs,” Williams told the Journal of Commerce. But the other shoe, in terms of international imports, is about to fall. “Our international [non-vessel-operating common carrier] group is reporting a noticeable decrease in our import container bookings from China, which is no doubt due to the tariffs,” said Williams. Booking cancellations could leave some ships departing <a href="https://www.joc.com/article/trans-pacific-blank-sailings-set-to-rise-after-china-bookings-drop-sharply-5984166">China half-empty through May</a>. That suggests any tariff-related bump in US LTL freight is likely to be short-lived. “We’re still dealing with a very soft market with no imminent sign of when it gets better,” said Mike Regan, chief relationship officer at TranzAct Technologies, a supply-chain consulting firm. The long-distance US LTL producer price index (PPI), a measure of all-inclusive LTL costs to shippers, dropped slightly in March after shooting up in January and February. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="397d0614-9019-449a-8ca0-64a882efbfbf"></dynamic-object></div>The PPI’s fluctuations may reflect some pulled-forward freight, but also temporary gains in manufacturing output and higher replacement rates in some LTL contracts. <h3>Tariffs and timing </h3>Some LTL executives and analysts, although not all, are reporting a slight bump in LTL demand that correlates with a “pull forward” of freight from Asia, Europe, Mexico and Canada, all targets of US tariffs. Estes Express, a national LTL carrier, may have had some pull-forward business in January and February, President Webb Estes told the Journal of Commerce. “It’s hard to ever say [an increase in volume] is definitely because of this or because of that,” Estes said. Bad weather and higher manufacturing output may have also affected shipment counts at Estes, the largest privately-owned US LTL company. “I would say in the last four weeks or so [the market has been] maybe 2% to 2.5% softer than I anticipated, but a whole lot of things can factor into that,” he said. For one, US manufacturing in March slipped to its lowest rate of expansion so far this year, dropping to 50.2 from 52.7 in February, according to the S&amp;P Global Purchasing Managers’ Index (PMI). Even so, “there’s not been any monumental fall-off in volume,” said Estes. “It just hasn’t popped like we’re used to [in March and April].” “Our current LTL shipment numbers don’t show any increase, or decrease for that matter, based on pending tariffs,” said Chris Jamroz, CEO and executive chairman of long-distance LTL provider Roadrunner. “We have noticed some shippers pre-positioning freight and building inventory to stock in domestic warehouses, but these moves are mostly impacting airfreight, intermodal and truckload.” Shippers and analysts refer to a “steady state” market restrained by uncertainty over the Trump administration’s tariff plans and their impact on the global economy. More detail on LTL volume changes will become available as the large publicly-traded carriers release their first-quarter earnings over the next few weeks. “If we’re seeing anything, it’s steady [LTL] volumes,” said Aaron LaGanke, vice president of freight services at AFS Logistics, a third-party logistics provider, freight payment firm and producer of the quarterly TD Cowen / AFS Logistics Freight Index Forecast. LaGanke sees economic uncertainty holding back the market. “There are shippers who are pausing and asking, ‘What should we do?’” he said. “People want to make decisions based on data. When the information they get changes every day, it’s really hard to do that.” AFS Logistics expects its LTL freight index <a href="https://www.joc.com/article/trump-tariff-chaos-restrains-us-truckload-ltl-markets-5979968">to decline 0.4 percentage point</a> from the first quarter to 63.4 in the second quarter — still up 0.7% from a year ago. “If there are spikes in demand, they’re in specific geographic areas, not overall,” he said. Wall Street investment firm Stifel still expects flat to moderate growth in LTL volumes in the second quarter, with “choppy demand fundamentals.” “It’s difficult to ascertain whether demand has been pushed further out or has dried up,” Stifel said in a note to clients. Contact William B. Cassidy at <a href="bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

The rush of imports into the US ahead of the implementation of tariffs has boosted less-than-truckload (LTL) freight volumes — but unevenly, sources tell the Journal of Commerce. LTL carriers close to major seaports and US border crossings are picking up “pull-forward” freight, with national carriers likely seeing less of an uptick than some regional carriers. One of the hot markets is along the US-Mexico border , which has seen waves of freight spurred by the US-Mexico trade dispute. “We have seen a noticeable but manageable increase in our cross-border traffic at our Texas border facilities,” said Kent Williams, executive vice president of sales and marketing at Averitt, a Tennessee-based regional trucking company. The increase has primarily been in LTL volume, Williams said, though Averitt’s other business lines — which include truckload and drayage — have enjoyed higher demand since the beginning of March as well. “We have been busy over the course of the past 30 to 45 days with respect to our dray and transload business at all our portside facilities across the south, likely due to the push to get ahead of the tariffs,” Williams told the Journal of Commerce. But the other shoe, in terms of international imports, is about to fall. “Our international [non-vessel-operating common carrier] group is reporting a noticeable decrease in our import container bookings from China, which is no doubt due to the tariffs,” said Williams. Booking cancellations could leave some ships departing China half-empty through May . That suggests any tariff-related bump in US LTL freight is likely to be short-lived. “We’re still dealing with a very soft market with no imminent sign of when it gets better,” said Mike Regan, chief relationship officer at TranzAct Technologies, a supply-chain consulting firm. The long-distance US LTL producer price index (PPI), a measure of all-inclusive LTL costs to shippers, dropped slightly in March after shooting up in January and February. The PPI’s fluctuations may reflect some pulled-forward freight, but also temporary gains in manufacturing output and higher replacement rates in some LTL contracts. Tariffs and timing Some LTL executives and analysts, although not all, are reporting a slight bump in LTL demand that correlates with a “pull forward” of freight from Asia, Europe, Mexico and Canada, all targets of US tariffs. Estes Express, a national LTL carrier, may have had some pull-forward business in January and February, President Webb Estes told the Journal of Commerce. “It’s hard to ever say [an increase in volume] is definitely because of this or because of that,” Estes said. Bad weather and higher manufacturing output may have also affected shipment counts at Estes, the largest privately-owned US LTL company. “I would say in the last four weeks or so [the market has been] maybe 2% to 2.5% softer than I anticipated, but a whole lot of things can factor into that,” he said. For one, US manufacturing in March slipped to its lowest rate of expansion so far this year, dropping to 50.2 from 52.7 in February, according to the S&P Global Purchasing Managers’ Index (PMI). Even so, “there’s not been any monumental fall-off in volume,” said Estes. “It just hasn’t popped like we’re used to [in March and April].” “Our current LTL shipment numbers don’t show any increase, or decrease for that matter, based on pending tariffs,” said Chris Jamroz, CEO and executive chairman of long-distance LTL provider Roadrunner. “We have noticed some shippers pre-positioning freight and building inventory to stock in domestic warehouses, but these moves are mostly impacting airfreight, intermodal and truckload.” Shippers and analysts refer to a “steady state” market restrained by uncertainty over the Trump administration’s tariff plans and their impact on the global economy. More detail on LTL volume changes will become available as the large publicly-traded carriers release their first-quarter earnings over the next few weeks. “If we’re seeing anything, it’s steady [LTL] volumes,” said Aaron LaGanke, vice president of freight services at AFS Logistics, a third-party logistics provider, freight payment firm and producer of the quarterly TD Cowen / AFS Logistics Freight Index Forecast. LaGanke sees economic uncertainty holding back the market. “There are shippers who are pausing and asking, ‘What should we do?’” he said. “People want to make decisions based on data. When the information they get changes every day, it’s really hard to do that.” AFS Logistics expects its LTL freight index to decline 0.4 percentage point from the first quarter to 63.4 in the second quarter — still up 0.7% from a year ago. “If there are spikes in demand, they’re in specific geographic areas, not overall,” he said. Wall Street investment firm Stifel still expects flat to moderate growth in LTL volumes in the second quarter, with “choppy demand fundamentals.” “It’s difficult to ascertain whether demand has been pushed further out or has dried up,” Stifel said in a note to clients. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Surface

US LTL carriers see uneven uptick in demand amid trade uncertainty

<div class="phx-topic abstract-wrapper">Carriers in the specialized cargo sector are designing contracts that would shift the cost of the US’ possible tax on Chinese tonnage to heavy-lift and project cargo shippers. </div>

Carriers in the specialized cargo sector are designing contracts that would shift the cost of the US’ possible tax on Chinese tonnage to heavy-lift and project cargo shippers.

<div class="phx-topic">Heavy-lift and project cargo shippers could end up paying 25% more in transportation costs if carriers and shipowners enact contract clauses meant to recoup possible US port fees associated with Chinese-owned, -operated and -built ships. As the United States Trade Representative (USTR) considers fees that would rattle the breakbulk market, vessel owners see opportunities to get ahead of the possible disruption by including clauses that address the fees. “Many carriers are working on finding solutions for the additional port dues for operators of Chinese-built ships,” Yorck Niclas Prehm, head of research with shipbroker Toepfer Transport, told the Journal of Commerce. “A significant number of these carriers have already incorporated clauses in their offers and booking notes that enable them to pass on the potential additional costs to the shippers.” One carrier source estimated that project cargo transportation costs could increase by 25% and expects the charges — if implemented — to be accepted with relatively little pushback as carriers appear united in their plans to pass down the cost. Still, carriers and shipowners stressed the potential implications of the fees, which are astronomically higher than other port fees normally addressed in contractual clauses. “Through the existing contractual framework, we are actually able to contract our way out of it,” said Thomas Damsgaard, head of Americas at BIMCO. BIMCO is one of the largest international shipping associations representing shipowners. And while contracts in some sectors of the shipping industry are less iron clad, the heavy-lift and project cargo market is small enough that contractual obligations are more durable. <h3>Port diversions possible </h3>Damsgaard said the structural context for port fees in general is already in most contracts and only needs to be revised to protect vessel owners from bearing the costs of the USTR proposal. Carriers and shipowners agreed, though, that the size of the proposed USTR fees adds another layer of complexity to passing costs down to the shipper. Some breakbulk carriers are also pursuing uniformity in addressing solutions to avoid bearing the cost that might be associated with Chinese vessels, such as inserting a clause in their contracts that allows for diversions to non-US ports. Such a clause might resemble a voyage charter war risk clause in that it allows carriers to cancel the contract before loading if they believe the threat of port fees is likely. And if cargo is already loaded when the threat is realized, then the cargo can be delivered to an alternate port. Ultimately, the contract clause would allow for any port costs to be passed on to the charterer. Still, the ongoing uncertainty remains the driving factor between settling contracts and planning projects. “At the moment the main word for me [with projects] is uncertainty,” Peter Molloy, senior associate of breakbulk and heavy-lift for maritime research company Drewry, told the Journal of Commerce. “What is coming out of the US regarding trade wars ... is not the immediate problem. It is the uncertainty it brings.” Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

Heavy-lift and project cargo shippers could end up paying 25% more in transportation costs if carriers and shipowners enact contract clauses meant to recoup possible US port fees associated with Chinese-owned, -operated and -built ships. As the United States Trade Representative (USTR) considers fees that would rattle the breakbulk market, vessel owners see opportunities to get ahead of the possible disruption by including clauses that address the fees. “Many carriers are working on finding solutions for the additional port dues for operators of Chinese-built ships,” Yorck Niclas Prehm, head of research with shipbroker Toepfer Transport, told the Journal of Commerce. “A significant number of these carriers have already incorporated clauses in their offers and booking notes that enable them to pass on the potential additional costs to the shippers.” One carrier source estimated that project cargo transportation costs could increase by 25% and expects the charges — if implemented — to be accepted with relatively little pushback as carriers appear united in their plans to pass down the cost. Still, carriers and shipowners stressed the potential implications of the fees, which are astronomically higher than other port fees normally addressed in contractual clauses. “Through the existing contractual framework, we are actually able to contract our way out of it,” said Thomas Damsgaard, head of Americas at BIMCO. BIMCO is one of the largest international shipping associations representing shipowners. And while contracts in some sectors of the shipping industry are less iron clad, the heavy-lift and project cargo market is small enough that contractual obligations are more durable. Port diversions possible Damsgaard said the structural context for port fees in general is already in most contracts and only needs to be revised to protect vessel owners from bearing the costs of the USTR proposal. Carriers and shipowners agreed, though, that the size of the proposed USTR fees adds another layer of complexity to passing costs down to the shipper. Some breakbulk carriers are also pursuing uniformity in addressing solutions to avoid bearing the cost that might be associated with Chinese vessels, such as inserting a clause in their contracts that allows for diversions to non-US ports. Such a clause might resemble a voyage charter war risk clause in that it allows carriers to cancel the contract before loading if they believe the threat of port fees is likely. And if cargo is already loaded when the threat is realized, then the cargo can be delivered to an alternate port. Ultimately, the contract clause would allow for any port costs to be passed on to the charterer. Still, the ongoing uncertainty remains the driving factor between settling contracts and planning projects. “At the moment the main word for me [with projects] is uncertainty,” Peter Molloy, senior associate of breakbulk and heavy-lift for maritime research company Drewry, told the Journal of Commerce. “What is coming out of the US regarding trade wars ... is not the immediate problem. It is the uncertainty it brings.” Contact Laura Robb at laura.robb@spglobal.com .

Heavy-haul transport

Project cargo carriers move to shield themselves from US port fee proposal

<div class="phx-topic abstract-wrapper">There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession — rate deflation accompanied by cost inflation — and if carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth. </div>

There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession — rate deflation accompanied by cost inflation — and if carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth.

<div class="phx-topic">The surface freight transportation industry is now pinning its hope on economic recovery — for the third straight year — on an expected recovery in the second half of the year. The industry consensus calls for incremental improvement in truckload rates driven by gradual improvement in sector fundamentals throughout the year. Nevertheless, the most recent results of many public truckload stocks have been sobering. Although some carriers observed some “green shoots” during peak season, post-election gains have been given back — and then some. Multiples are below historic norms, and fleet sizes continue to contract — despite several years of shrinkage. There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession caused by rate deflation accompanied by cost inflation. If carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth. To analyze this dichotomy, I utilized “An Analysis of the Operational Cost of Trucking: 2024 Update.” Prepared by the American Transportation Research Institute (ATRI), this annual report casts a wide net in respondent type, size and operating model; provides historical context for almost the past 20 years and is remarkably transparent when compared with other self-anointed experts. The first chart explains this difference by looking at two distinct metrics: driver cost per hour and fuel cost per mile. Fuel costs have deviated wildly over this period, whereas driver cost has been steadily increasing. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="b372d175-2a73-40b7-83a0-f350f63093d1"></dynamic-object></div>Nevertheless, in an environment where trucking costs are on an inexorable inflationary arc, how have rates remained so depressed? I believe that the issue is that the trucking market is less “free” since the COVID-19 pandemic. A free market exists when supply and demand (through “voluntary exchange”) determine economic outcomes. Buyers and sellers are free to trade goods and services free of governmental intervention or market dominance by one side: monopoly, oligopoly or monopsony. A free market also requires the freedom of firms to enter that market because there are no barriers of entry. Since deregulation, the truckload market has had this freedom. However, market freedom also permits firms to freely depart from the market without any barriers to exit. This has not necessarily been the case since the pandemic. At the smallest increment of production, an individual with a commercial driver’s license could acquire a tractor and trailer, obtain insurance, register with the government and be in business. If the business did not work out, the individual could hand the keys to the equipment lender and be on with their life. COVID changed these dynamics. Equipment was wildly expensive and lenders required more security than just the underlying asset. New entrants needed to pledge their homes or life savings. When the market turned, there was no exit possible because they were “upside down.” The asset was worth less than they paid for it. These owner-operators are now forced into an untenable situation. Having no exit, their only choice is to keep driving until the market changes. Because survival — not profitability — is the goal, their floor price is what I call “direct cash costs.” In the ATRI model, this is fuel, insurance, permits/licenses and tolls. Costs such as equipment payments, maintenance and repair and tires are deferred until the end. I call them “episodic cash.” Driver wages and benefits are notional. The second chart shows how these costs have tracked the past 10 years. I have also included traditional truckload and intermodal. The former has no episodic cash. Maintenance is maintained, and equipment cost is deferred by parking equipment. Non-asset intermodal is all “direct cash” because all components are purchased. Bimodal intermodal providers are not shown, but they would be between traditional truckload and non-asset intermodal. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="7c8a9981-9386-4062-844d-cd07eb8ea529"></dynamic-object></div>The second chart also explains the freight recession. The traditional economies of scale enjoyed by large truckload carriers over owner-operators are meaningless when costs are not “apples to apples.” The same applies to intermodal’s competitive advantage. The intermodal line may be a little high; however, we have not seen a widespread willingness of railroads to cut their rates. This situation is not The Flying Dutchman, a phantom ship doomed to sail forever. Eventually, the equipment will be retired, and “normal” market conditions will return. Until then, this market situation is likely to maintain. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>.</div>

The surface freight transportation industry is now pinning its hope on economic recovery — for the third straight year — on an expected recovery in the second half of the year. The industry consensus calls for incremental improvement in truckload rates driven by gradual improvement in sector fundamentals throughout the year. Nevertheless, the most recent results of many public truckload stocks have been sobering. Although some carriers observed some “green shoots” during peak season, post-election gains have been given back — and then some. Multiples are below historic norms, and fleet sizes continue to contract — despite several years of shrinkage. There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession caused by rate deflation accompanied by cost inflation. If carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth. To analyze this dichotomy, I utilized “An Analysis of the Operational Cost of Trucking: 2024 Update.” Prepared by the American Transportation Research Institute (ATRI), this annual report casts a wide net in respondent type, size and operating model; provides historical context for almost the past 20 years and is remarkably transparent when compared with other self-anointed experts. The first chart explains this difference by looking at two distinct metrics: driver cost per hour and fuel cost per mile. Fuel costs have deviated wildly over this period, whereas driver cost has been steadily increasing. Nevertheless, in an environment where trucking costs are on an inexorable inflationary arc, how have rates remained so depressed? I believe that the issue is that the trucking market is less “free” since the COVID-19 pandemic. A free market exists when supply and demand (through “voluntary exchange”) determine economic outcomes. Buyers and sellers are free to trade goods and services free of governmental intervention or market dominance by one side: monopoly, oligopoly or monopsony. A free market also requires the freedom of firms to enter that market because there are no barriers of entry. Since deregulation, the truckload market has had this freedom. However, market freedom also permits firms to freely depart from the market without any barriers to exit. This has not necessarily been the case since the pandemic. At the smallest increment of production, an individual with a commercial driver’s license could acquire a tractor and trailer, obtain insurance, register with the government and be in business. If the business did not work out, the individual could hand the keys to the equipment lender and be on with their life. COVID changed these dynamics. Equipment was wildly expensive and lenders required more security than just the underlying asset. New entrants needed to pledge their homes or life savings. When the market turned, there was no exit possible because they were “upside down.” The asset was worth less than they paid for it. These owner-operators are now forced into an untenable situation. Having no exit, their only choice is to keep driving until the market changes. Because survival — not profitability — is the goal, their floor price is what I call “direct cash costs.” In the ATRI model, this is fuel, insurance, permits/licenses and tolls. Costs such as equipment payments, maintenance and repair and tires are deferred until the end. I call them “episodic cash.” Driver wages and benefits are notional. The second chart shows how these costs have tracked the past 10 years. I have also included traditional truckload and intermodal. The former has no episodic cash. Maintenance is maintained, and equipment cost is deferred by parking equipment. Non-asset intermodal is all “direct cash” because all components are purchased. Bimodal intermodal providers are not shown, but they would be between traditional truckload and non-asset intermodal. The second chart also explains the freight recession. The traditional economies of scale enjoyed by large truckload carriers over owner-operators are meaningless when costs are not “apples to apples.” The same applies to intermodal’s competitive advantage. The intermodal line may be a little high; however, we have not seen a widespread willingness of railroads to cut their rates. This situation is not The Flying Dutchman, a phantom ship doomed to sail forever. Eventually, the equipment will be retired, and “normal” market conditions will return. Until then, this market situation is likely to maintain. Contact Ted Prince at ted@tricitiesintermodal.com .

Surface industry faces obstacles on way to hoped-for H2 recovery

<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 .

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

Dry Van

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 Weekly % change: {van_rate_previous_week_change.formatNumber('#.##%')}

Flatbed

{name} 
{dateX.formatDate('MMM dd, yyyy')}: ${valueY}
 Weekly % change: {flatbed_rate_previous_week_change.formatNumber('#.##%')}

Refrigerated

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{dateX.formatDate('MMM dd, yyyy')}: ${valueY} 
 Weekly % change: {reefer_rate_previous_week_change.formatNumber('#.##%')}

DAT Freight & Analytics is an independent source of truckload pricing and business intelligence. Using an automated daily process, DAT collects invoices from nearly 1,200 transportation companies totaling more than $137 billion in freight spend annually. It verifies and updates data daily; each market rate reported in RateView Analytics requires a minimum number of submissions, so prices cannot be manipulated; and the algorithms account for outliers. [DAT](https://dat.com)

US dry-van, flatbed and refrigerated truckload spot rates (DAT)

US Truckload spot rates weekly (DAT) Gateway

<div class="phx-topic abstract-wrapper">With the door to US trade effectively slammed shut by tariffs, Chinese manufacturers are urgently looking for alternative markets in which to offload their surplus inventory.</div>

With the door to US trade effectively slammed shut by tariffs, Chinese manufacturers are urgently looking for alternative markets in which to offload their surplus inventory.

<div class="phx-topic">The European Commission is closely monitoring containerized imports from China amid growing fears that the high US tariffs will force a redirection of trans-Pacific trade flows and flood Europe with Chinese goods. While there is no evidence yet of increasing volume from China above seasonal norms, the commission is taking no chances and has deployed an “Import Surveillance Task Force” to track any irregular changes in trade. “The commission is monitoring imports closely to ensure that it detects in good time any potential increase in imports due to trade diversion,” Olof Gill, spokesperson for trade at the European Commission, told the Journal of Commerce Wednesday. The US’ 145% tariffs on Chinese imports came into effect April 9, leading to significant frontloading ahead of that date and a <a href="https://www.joc.com/article/trans-pacific-blank-sailings-set-to-rise-after-china-bookings-drop-sharply-5984166">large-scale cancellation of cargo bookings</a> thereafter. Some shippers are requesting containers already in-gated at Chinese origins not be loaded on ships, while others have asked that containers be pulled completely from port, according to a trans-Pacific carrier executive. Ships leaving China for the US in the coming weeks are expected to be half-full as the cancellations continue, with significant blank sailings likely on the trans-Pacific and carriers seeking out other markets to utilize their capacity. Southeast Asian origins, for instance, are seeing a surge in ship utilization as shippers frontload exports from those nations to the US to take advantage of a 90-day reprieve on reciprocal tariffs. With the door to US trade effectively slammed shut, Chinese manufacturers are urgently looking for alternative markets in which to offload their surplus inventory. Europe’s huge consumer base is an attractive target, and the European Commission is shoring up its defenses against any incoming wave of cheap Chinese products that could displace European-made goods. Gill said if the new monitoring mechanism detected an increase in Chinese imports that could harm European Union industry, the EU “will be ready to respond appropriately.” “In such a case, the commission could deploy ... its trade defense instruments, including a safeguard investigation that could be initiated in case an import surge causes, or threatens to cause, serious injury to EU industry,” the spokesman added. Such is the concern in Europe that European Commission President Ursula von der Leyen called Chinese Premier Li Qiang last week to urge Beijing to address possible trade diversions due to US tariffs. <h3>Record capacity deployed on Asia-Europe trade </h3>The concerns of the European Commission might be valid. According to Sea-Intelligence Maritime Analysis, carriers have announced an all-time high in capacity sailing out of Asia toward North Europe this week at 411,600 TEUs, beating the record set in early March of 2021, with very limited capacity blanked. “Surely not a coincidence, and even though some of it should have sailed last week, it’s not canceled but set to sail this week,” said Peter Sand, chief analyst for rate benchmarking platform Xeneta. The average transit time from China to North Europe is 54 days, meaning the first shipments from any diverted trade will begin to arrive in early June. Casper Ellerbaek, global head of ocean freight at DHL Global Forwarding, said strong bookings from Asia to Europe have been sustained through recent weeks, but that was aligned with DHL’s usual book of business. “There is indeed speculation within the market that, as US demand decreases due to the Trump tariffs, China may seek alternative markets to offload its goods at competitive prices,” Ellerbaek told the Journal of Commerce, adding, however, that it was too early to definitively identify that trend. “Currently, many Chinese factories have likely manufactured products based on existing orders from US importers,” he said. “These finished goods or in-progress orders may not be easily cancellable, and some are already awaiting shipment to the US. As such, we have not yet seen a significant increase in Chinese containers destined for European ports.” Also not yet seeing a significant rise in China volume was Marc Meier, global head of ocean freight at Toll Group. But he warned that could change. “One thing we can say is that all signs point towards China and others having to play more in other markets, so Asia to Europe will surely receive more focus,” Meier told the Journal of Commerce Wednesday. Carriers shifting capacity around to mitigate the impact of US tariffs is bringing a familiar disruptive factor back into the mix — equipment imbalances. “If we do begin to see trade flow impacts from the tariffs, it is likely that shipping lines will adjust their sailing schedules, potentially omitting some or all Chinese ports on certain voyages to accommodate increased demand from other regions,” Ellerbaek said. “This adjustment will lead to an equipment imbalance, as seen in previous disruptions like the Red Sea crisis and during the pandemic, where repositioning equipment to align with new trade flows takes time,” he added. <h3>China surge would worsen persistent port congestion </h3>Another potential issue is that any surge in Chinese imports will quickly exacerbate the severe port congestion that is still causing delays across the major North Europe and Mediterranean gateways. A host of factors are responsible for the bottlenecks, including full container yards at most terminals, crane maintenance in some ports, berth congestion, rail disruption from line closures in northern Germany and low water levels on the Rhine River impacting inland connections. HMM is reporting berth waiting times of 18 days in London Gateway and 4.5 days at the Greek hub of Piraeus, where 12 feeder vessels are currently waiting to be handled. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="0e7c6c96-deff-4701-bb62-76f7f3ffef74"></dynamic-object></div>While Europe prepares for a possible wave of Chinese imports, the spot market has finally arrested its steady slide that began in late December. Xeneta data shows that China to North Europe rates are up 7% since April 1 at $2,514 per FEU. But while an increase in Chinese imports may help rising rates, it won’t last, according to Rico Luman, senior economist at global Bank ING. “It will be the first reaction because of this disruption but afterwards the massive overcapacity in container shipping will weigh on rates once again, because that is the backdrop to all of this,” Luman told the Journal of Commerce. “This tariff discussion is not good news for global trade, and I expect rates to drop again over the course of this year,” he added. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The European Commission is closely monitoring containerized imports from China amid growing fears that the high US tariffs will force a redirection of trans-Pacific trade flows and flood Europe with Chinese goods. While there is no evidence yet of increasing volume from China above seasonal norms, the commission is taking no chances and has deployed an “Import Surveillance Task Force” to track any irregular changes in trade. “The commission is monitoring imports closely to ensure that it detects in good time any potential increase in imports due to trade diversion,” Olof Gill, spokesperson for trade at the European Commission, told the Journal of Commerce Wednesday. The US’ 145% tariffs on Chinese imports came into effect April 9, leading to significant frontloading ahead of that date and a large-scale cancellation of cargo bookings thereafter. Some shippers are requesting containers already in-gated at Chinese origins not be loaded on ships, while others have asked that containers be pulled completely from port, according to a trans-Pacific carrier executive. Ships leaving China for the US in the coming weeks are expected to be half-full as the cancellations continue, with significant blank sailings likely on the trans-Pacific and carriers seeking out other markets to utilize their capacity. Southeast Asian origins, for instance, are seeing a surge in ship utilization as shippers frontload exports from those nations to the US to take advantage of a 90-day reprieve on reciprocal tariffs. With the door to US trade effectively slammed shut, Chinese manufacturers are urgently looking for alternative markets in which to offload their surplus inventory. Europe’s huge consumer base is an attractive target, and the European Commission is shoring up its defenses against any incoming wave of cheap Chinese products that could displace European-made goods. Gill said if the new monitoring mechanism detected an increase in Chinese imports that could harm European Union industry, the EU “will be ready to respond appropriately.” “In such a case, the commission could deploy ... its trade defense instruments, including a safeguard investigation that could be initiated in case an import surge causes, or threatens to cause, serious injury to EU industry,” the spokesman added. Such is the concern in Europe that European Commission President Ursula von der Leyen called Chinese Premier Li Qiang last week to urge Beijing to address possible trade diversions due to US tariffs. Record capacity deployed on Asia-Europe trade The concerns of the European Commission might be valid. According to Sea-Intelligence Maritime Analysis, carriers have announced an all-time high in capacity sailing out of Asia toward North Europe this week at 411,600 TEUs, beating the record set in early March of 2021, with very limited capacity blanked. “Surely not a coincidence, and even though some of it should have sailed last week, it’s not canceled but set to sail this week,” said Peter Sand, chief analyst for rate benchmarking platform Xeneta. The average transit time from China to North Europe is 54 days, meaning the first shipments from any diverted trade will begin to arrive in early June. Casper Ellerbaek, global head of ocean freight at DHL Global Forwarding, said strong bookings from Asia to Europe have been sustained through recent weeks, but that was aligned with DHL’s usual book of business. “There is indeed speculation within the market that, as US demand decreases due to the Trump tariffs, China may seek alternative markets to offload its goods at competitive prices,” Ellerbaek told the Journal of Commerce, adding, however, that it was too early to definitively identify that trend. “Currently, many Chinese factories have likely manufactured products based on existing orders from US importers,” he said. “These finished goods or in-progress orders may not be easily cancellable, and some are already awaiting shipment to the US. As such, we have not yet seen a significant increase in Chinese containers destined for European ports.” Also not yet seeing a significant rise in China volume was Marc Meier, global head of ocean freight at Toll Group. But he warned that could change. “One thing we can say is that all signs point towards China and others having to play more in other markets, so Asia to Europe will surely receive more focus,” Meier told the Journal of Commerce Wednesday. Carriers shifting capacity around to mitigate the impact of US tariffs is bringing a familiar disruptive factor back into the mix — equipment imbalances. “If we do begin to see trade flow impacts from the tariffs, it is likely that shipping lines will adjust their sailing schedules, potentially omitting some or all Chinese ports on certain voyages to accommodate increased demand from other regions,” Ellerbaek said. “This adjustment will lead to an equipment imbalance, as seen in previous disruptions like the Red Sea crisis and during the pandemic, where repositioning equipment to align with new trade flows takes time,” he added. China surge would worsen persistent port congestion Another potential issue is that any surge in Chinese imports will quickly exacerbate the severe port congestion that is still causing delays across the major North Europe and Mediterranean gateways. A host of factors are responsible for the bottlenecks, including full container yards at most terminals, crane maintenance in some ports, berth congestion, rail disruption from line closures in northern Germany and low water levels on the Rhine River impacting inland connections. HMM is reporting berth waiting times of 18 days in London Gateway and 4.5 days at the Greek hub of Piraeus, where 12 feeder vessels are currently waiting to be handled. While Europe prepares for a possible wave of Chinese imports, the spot market has finally arrested its steady slide that began in late December. Xeneta data shows that China to North Europe rates are up 7% since April 1 at $2,514 per FEU. But while an increase in Chinese imports may help rising rates, it won’t last, according to Rico Luman, senior economist at global Bank ING. “It will be the first reaction because of this disruption but afterwards the massive overcapacity in container shipping will weigh on rates once again, because that is the backdrop to all of this,” Luman told the Journal of Commerce. “This tariff discussion is not good news for global trade, and I expect rates to drop again over the course of this year,” he added. Contact Greg Knowler at greg.knowler@spglobal.com .

Forwarding

Asia-Europe

International ports

Europe on alert to track any wave of diverted Chinese imports

<div class="phx-topic abstract-wrapper">US tariffs are forcing shippers in Mexico to rethink global sourcing and logistics strategies as complying with the USMCA becomes more complex. </div>

US tariffs are forcing shippers in Mexico to rethink global sourcing and logistics strategies as complying with the USMCA becomes more complex.

<div class="phx-topic">For logistics manager Yuri Garcia, the confusion surrounding US trade disputes with Mexico, China and the rest of the globe increasingly resembles the chaotic early days of the COVID-19 pandemic. “Every day back then, we were turning on our TVs in the morning to see where we were going, what are they saying now, right?” Garcia said during a panel discussion at the Redwood Mexico Cross-Border Logistics Council in Monterrey last week. Today, she’s tuning into the news each morning to find out which nations and what goods are being hit with US tariffs, how high duties are going to go, and what may come next. “Are the tariffs on China going to be 125% or 145%?” Garcia said. The total tariffs imposed on China reached 145% as of April 10, the date she spoke at the conference. “You know tomorrow it’s going to be something else, so you’ve got to be prepared.” Being prepared for the unknown in terms of tariffs and trade was the crux of many discussions at the logistics conference in Monterrey, where Garcia works for Japan-based Nidec Motor Corp. Nidec produces industrial motors and generators, moving about 800 shipments a month across the US-Mexico border in both directions. Nidec also imports goods to Mexico from Europe and Asia, including China. So, knowing precisely what products and nations are being affected or targeted by tariffs is critical to planning and preparation for shippers with suppliers and customers in several international markets, not just the US and Mexico. Goods produced in Mexico typically contain components from several countries. Measuring the exact percentage of inputs from each international source is key to knowing whether a shipment will enter the US duty-free or be hit with a 25% import tax. “Right now, we have a lot of suppliers in Asia, so we have to have some other sources,” said Garcia. Nidec isn’t looking to drop any suppliers, she said, but the company needs to add some alternative vendors in the US and in Mexico to its portfolio. <h3>Diversifying sourcing </h3>The same issue is hitting manufacturers in Mexico across industrial sectors, speakers and sources at the Redwood Mexico event told the Journal of Commerce. “We’ve done a little more exploring to give ourselves more options,” said Bill Fogt, senior vice president at Dometic, a maker of outdoor products, including Igloo coolers. Based in Sweden, Dometic has 23 manufacturing facilities in 11 countries, with two factories in Mexico. Expecting change in the “supply chain climate” to accelerate, Dometic is leaning into its existing supplier relationships. “We want to be very close to our suppliers, whether in logistics or raw materials,” Fogt said. Maintaining close communications with suppliers, partners and customers is key to making sure US imports are <a href="https://www.joc.com/article/tariff-uncertainty-pushing-up-transportation-costs-at-us-mexico-border-5984698">compliant with the rules of origin</a> in the US-Mexico-Canada Agreement (USMCA) to avoid the Trump administration’s 25% tariff. “You need to keep your paper trail carefully, and make sure you’re adjusting for any changes” in components and global supply, said trade attorney Luis Martinez, a partner at Abogados Martinez Serna S.C. and a board member of the US Mexico Bar Association. Martinez urged shippers to audit the procedures they use to verify USMCA compliance. “A lot of companies do it yearly, but I know companies that do reviews every month,” he said. Daikin, a maker of air conditioners and refrigeration equipment, is in the midst of planning for potentially abrupt transportation and sourcing changes caused by tariffs, said Joe McAbee, the company’s vice president of domestic and international transportation. “We have manufacturing around the world, and so we can, to some degree, shift our production, although not quickly,” McAbee said in Monterrey. But he advises caution. “Every day is a new dynamic,” he said. “Every time a new tariff drops, your strategy changes. I think it’s important to let this play out and see where it’s going to go, because at some point it has to level out. We can't live in this continual chaos forever.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

For logistics manager Yuri Garcia, the confusion surrounding US trade disputes with Mexico, China and the rest of the globe increasingly resembles the chaotic early days of the COVID-19 pandemic. “Every day back then, we were turning on our TVs in the morning to see where we were going, what are they saying now, right?” Garcia said during a panel discussion at the Redwood Mexico Cross-Border Logistics Council in Monterrey last week. Today, she’s tuning into the news each morning to find out which nations and what goods are being hit with US tariffs, how high duties are going to go, and what may come next. “Are the tariffs on China going to be 125% or 145%?” Garcia said. The total tariffs imposed on China reached 145% as of April 10, the date she spoke at the conference. “You know tomorrow it’s going to be something else, so you’ve got to be prepared.” Being prepared for the unknown in terms of tariffs and trade was the crux of many discussions at the logistics conference in Monterrey, where Garcia works for Japan-based Nidec Motor Corp. Nidec produces industrial motors and generators, moving about 800 shipments a month across the US-Mexico border in both directions. Nidec also imports goods to Mexico from Europe and Asia, including China. So, knowing precisely what products and nations are being affected or targeted by tariffs is critical to planning and preparation for shippers with suppliers and customers in several international markets, not just the US and Mexico. Goods produced in Mexico typically contain components from several countries. Measuring the exact percentage of inputs from each international source is key to knowing whether a shipment will enter the US duty-free or be hit with a 25% import tax. “Right now, we have a lot of suppliers in Asia, so we have to have some other sources,” said Garcia. Nidec isn’t looking to drop any suppliers, she said, but the company needs to add some alternative vendors in the US and in Mexico to its portfolio. Diversifying sourcing The same issue is hitting manufacturers in Mexico across industrial sectors, speakers and sources at the Redwood Mexico event told the Journal of Commerce. “We’ve done a little more exploring to give ourselves more options,” said Bill Fogt, senior vice president at Dometic, a maker of outdoor products, including Igloo coolers. Based in Sweden, Dometic has 23 manufacturing facilities in 11 countries, with two factories in Mexico. Expecting change in the “supply chain climate” to accelerate, Dometic is leaning into its existing supplier relationships. “We want to be very close to our suppliers, whether in logistics or raw materials,” Fogt said. Maintaining close communications with suppliers, partners and customers is key to making sure US imports are compliant with the rules of origin in the US-Mexico-Canada Agreement (USMCA) to avoid the Trump administration’s 25% tariff. “You need to keep your paper trail carefully, and make sure you’re adjusting for any changes” in components and global supply, said trade attorney Luis Martinez, a partner at Abogados Martinez Serna S.C. and a board member of the US Mexico Bar Association. Martinez urged shippers to audit the procedures they use to verify USMCA compliance. “A lot of companies do it yearly, but I know companies that do reviews every month,” he said. Daikin, a maker of air conditioners and refrigeration equipment, is in the midst of planning for potentially abrupt transportation and sourcing changes caused by tariffs, said Joe McAbee, the company’s vice president of domestic and international transportation. “We have manufacturing around the world, and so we can, to some degree, shift our production, although not quickly,” McAbee said in Monterrey. But he advises caution. “Every day is a new dynamic,” he said. “Every time a new tariff drops, your strategy changes. I think it’s important to let this play out and see where it’s going to go, because at some point it has to level out. We can't live in this continual chaos forever.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

Rail News

In Mexico, global shippers seek new logistics options amid shifting US tariffs

<div class="phx-topic abstract-wrapper">Some ships are leaving China just half-full as the Trump administration’s rush of tariffs sends shippers into contortions about what to do with their freight. </div>

Some ships are leaving China just half-full as the Trump administration’s rush of tariffs sends shippers into contortions about what to do with their freight.

<div class="phx-topic">Ocean carriers on the eastbound trans-Pacific are poised to blank more voyages after a slew of booking cancellations last week that could leave some ships departing China half-empty through May. As the uncertainty around US tariffs on Chinese goods drags out, shippers face on-the-fly decisions about what to do with their suddenly more expensive freight. Port of Los Angeles Executive Director Gene Seroka said Friday that 12 sailings from China to the US West Coast in May have been canceled due to the Trump administration’s decision to put tariffs of 145% on most goods from China. Those dozen cancellations would put May’s blanks above April’s, according to data from third-party logistics provider Spedag Americas, which recorded 11 blanked voyages to Los Angeles during April, including three weekly voyages from a small independent carrier with about 2,000 TEUs of capacity. Ocean Alliance member Evergreen Marine, which operates the CPS service to Los Angeles, will have the service’s last scheduled voyage from Shanghai depart on Tuesday. No further sailings from China are scheduled until May 21, according to China-based shipping agents and the latest CPS schedule, which would mark four straight weeks of blanked service. The canceled voyages would remove 32,000 TEUs of capacity from the trans-Pacific over that period. Evergreen declined a request for comment about the CPS service. James Caradonna, executive vice president of Spedag Americas, told the Journal of Commerce that April’s blank sailings were for just one or two non-consecutive weeks. Carriers had been expected to start bringing more ships into service as 2025–26 annual service contracts are signed and seasonal summer shipments start. “Four consecutive weeks [of blank sailings on the service] is extreme,” Caradonna said. <h3>Half-full ships from China </h3>A senior vice president for an independent ocean carrier in the trans-Pacific trades told the Journal of Commerce that his company saw an immediate 30% drop in container bookings out of China last week due to the new tariffs. Other customers are requesting that containers already in-gated at origin not be loaded on ships, while others have asked that containers be pulled completely from the port, the source said, not an easy task inside of China’s high-volume gateways. Likewise, the source said there is concern that cargo already loaded on ships from China may be abandoned at US ports due to the tariff costs. He expects that ships leaving China for the US in the coming weeks will be less than half-full as the cancellations continue, forcing the carrier to blank more voyages. “People are canceling and putting cargo [from] China on pause,” the source said. “It will accelerate our blank sailing schedule because vessel utilization is dropping.” While utilization out of China is falling, he said ships in the Southeast Asia trade are seeing 90% to 100% utilization as US shippers seek to use the 90-day reprieve from reciprocal tariffs on other countries to frontload cargo, adding that vessels in China-US trades could be redeployed to Southeast Asia. Likewise, Asia-Mediterranean trades are seeing increasing strength, sending vessels in yet another direction. The longer the US and China engage in a back-and-forth on tariffs, the more it will force a long-term reconsideration of the carrier’s trans-Pacific network and whether there is enough volume out of China to support calls. “Our short-term reaction is to blank,” the source said. “But as people are accelerating their alternative sourcing — and this is giving everyone reason to accelerate those efforts — the effect is that we have to look at our rotations. We would probably eliminate some of the China ports.” Jason Cook, managing director of non-vessel-operating common carrier (NVO) Ardent Global Logistics, told the Journal of Commerce he’s seen a 60% drop in bookings out of China this week due to the tariffs. While the cancellations were initially among intermittent, low-volume shippers, he said the concerns about tariffs are now spreading to larger shippers with regular, consistent volume. “Whatever [was] leaving China on April 9, we [were] told to cancel it,” Cook said. “It’s not only the smaller customers, but the big ones as well saying we’re going to pause for two weeks.” April 9 was the date country-specific reciprocal tariffs took effect; they have since been paused for 90 days. But the China reciprocal tariffs remain in place. Ardent’s customers are also asking that their US-bound cargo at Chinese ports not be loaded or be removed from the marine terminal, Cook said. One customer tried to have the goods returned to the Chinese manufacturer, but it refused, he added. “The lack of clarity about tariffs has left so many customers confused that they are canceling all bookings, even if the container was already gated into the terminal,” Cook said. Cook is now fielding requests for use of bonded warehouses and foreign trade zones in the US as a short-term way to deal with the tariffs. He also expects that there will much more demand for freight out of Southeast Asia and India that will keep ships on those trades full. But with most of the empty containers still in China, US shippers may see delays at origin. “Once cargo out of China dries up, Southeast Asia is going to go a bit ballistic,” Cook said. “There’s not enough equipment and not enough calls. It’s setting up for some serious disruption.” <h3>Preparing for decline in volumes </h3>A New Jersey-based executive with a forwarder that handles 40,000 containers per year into the US told the Journal of Commerce there has been about a 20% drop in China-origin freight over the past week due to the tariffs. He said that most of the cancellations are among intermittent or low-volume shippers with about 2,000 containers per year. So far, the cancellations mostly just cover anything that would land in May, but as the tariff policy remains in place, he expects to see the cancellations start to affect cargo further out in June. The forwarder said some ocean carriers are deferring 2025 contract signings until May due to the uncertainty around tariffs. “I think this can get worse,” he said. A US-based executive for an alliance ocean carrier said that while some shippers immediately canceled bookings from China, other major customers are still proceeding with their shipments. But he said caution is increasing the longer Trump’s trade war with China drags out, adding that he expects tariffs will eventually cause more shippers to halt their freight from China. “Orders may be canceled or delayed until there’s more clarity on tariffs, so we’re preparing for a potential [volume] dip in the coming months,” the source said. And if the tariffs on China persist, the issue could reach far beyond volume retractions. According to Sanjay Tejwani, CEO of consulting firm 365 Logistics, the third quarter could bring tough decisions for some shippers moving Chinese cargo. “In Q3, if it remains as-is, some people are not going to ship,” said Tejwani. “Some things are just unaffordable. I am hearing that [some] containers might get abandoned. The importers may not even take delivery because they don’t want to pay the duties.” Benton Kauffman, head of trans-Pacific air and sea logistics at the forwarder DSV Global, told the Journal of Commerce Monday that overall eastbound freight in the trans-Pacific is down about 20%, but 60% of that volume is out of China. “I think in the next two weeks we will see Southeast Asia bounce back,” Kauffman said. A second carrier source said most retailers and direct importers are covered for at least the next three months because they have sufficient inventory to get them well into the summer. After that, they will have to decide how much they have to import and from which countries in the second half of the year, he said. “Eventually they will have to restock,” the carrier executive said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. Senior Editor Bill Mongelluzzo and Associate Editor Laura Robb contributed to this report. </div>

Ocean carriers on the eastbound trans-Pacific are poised to blank more voyages after a slew of booking cancellations last week that could leave some ships departing China half-empty through May. As the uncertainty around US tariffs on Chinese goods drags out, shippers face on-the-fly decisions about what to do with their suddenly more expensive freight. Port of Los Angeles Executive Director Gene Seroka said Friday that 12 sailings from China to the US West Coast in May have been canceled due to the Trump administration’s decision to put tariffs of 145% on most goods from China. Those dozen cancellations would put May’s blanks above April’s, according to data from third-party logistics provider Spedag Americas, which recorded 11 blanked voyages to Los Angeles during April, including three weekly voyages from a small independent carrier with about 2,000 TEUs of capacity. Ocean Alliance member Evergreen Marine, which operates the CPS service to Los Angeles, will have the service’s last scheduled voyage from Shanghai depart on Tuesday. No further sailings from China are scheduled until May 21, according to China-based shipping agents and the latest CPS schedule, which would mark four straight weeks of blanked service. The canceled voyages would remove 32,000 TEUs of capacity from the trans-Pacific over that period. Evergreen declined a request for comment about the CPS service. James Caradonna, executive vice president of Spedag Americas, told the Journal of Commerce that April’s blank sailings were for just one or two non-consecutive weeks. Carriers had been expected to start bringing more ships into service as 2025–26 annual service contracts are signed and seasonal summer shipments start. “Four consecutive weeks [of blank sailings on the service] is extreme,” Caradonna said. Half-full ships from China A senior vice president for an independent ocean carrier in the trans-Pacific trades told the Journal of Commerce that his company saw an immediate 30% drop in container bookings out of China last week due to the new tariffs. Other customers are requesting that containers already in-gated at origin not be loaded on ships, while others have asked that containers be pulled completely from the port, the source said, not an easy task inside of China’s high-volume gateways. Likewise, the source said there is concern that cargo already loaded on ships from China may be abandoned at US ports due to the tariff costs. He expects that ships leaving China for the US in the coming weeks will be less than half-full as the cancellations continue, forcing the carrier to blank more voyages. “People are canceling and putting cargo [from] China on pause,” the source said. “It will accelerate our blank sailing schedule because vessel utilization is dropping.” While utilization out of China is falling, he said ships in the Southeast Asia trade are seeing 90% to 100% utilization as US shippers seek to use the 90-day reprieve from reciprocal tariffs on other countries to frontload cargo, adding that vessels in China-US trades could be redeployed to Southeast Asia. Likewise, Asia-Mediterranean trades are seeing increasing strength, sending vessels in yet another direction. The longer the US and China engage in a back-and-forth on tariffs, the more it will force a long-term reconsideration of the carrier’s trans-Pacific network and whether there is enough volume out of China to support calls. “Our short-term reaction is to blank,” the source said. “But as people are accelerating their alternative sourcing — and this is giving everyone reason to accelerate those efforts — the effect is that we have to look at our rotations. We would probably eliminate some of the China ports.” Jason Cook, managing director of non-vessel-operating common carrier (NVO) Ardent Global Logistics, told the Journal of Commerce he’s seen a 60% drop in bookings out of China this week due to the tariffs. While the cancellations were initially among intermittent, low-volume shippers, he said the concerns about tariffs are now spreading to larger shippers with regular, consistent volume. “Whatever [was] leaving China on April 9, we [were] told to cancel it,” Cook said. “It’s not only the smaller customers, but the big ones as well saying we’re going to pause for two weeks.” April 9 was the date country-specific reciprocal tariffs took effect; they have since been paused for 90 days. But the China reciprocal tariffs remain in place. Ardent’s customers are also asking that their US-bound cargo at Chinese ports not be loaded or be removed from the marine terminal, Cook said. One customer tried to have the goods returned to the Chinese manufacturer, but it refused, he added. “The lack of clarity about tariffs has left so many customers confused that they are canceling all bookings, even if the container was already gated into the terminal,” Cook said. Cook is now fielding requests for use of bonded warehouses and foreign trade zones in the US as a short-term way to deal with the tariffs. He also expects that there will much more demand for freight out of Southeast Asia and India that will keep ships on those trades full. But with most of the empty containers still in China, US shippers may see delays at origin. “Once cargo out of China dries up, Southeast Asia is going to go a bit ballistic,” Cook said. “There’s not enough equipment and not enough calls. It’s setting up for some serious disruption.” Preparing for decline in volumes A New Jersey-based executive with a forwarder that handles 40,000 containers per year into the US told the Journal of Commerce there has been about a 20% drop in China-origin freight over the past week due to the tariffs. He said that most of the cancellations are among intermittent or low-volume shippers with about 2,000 containers per year. So far, the cancellations mostly just cover anything that would land in May, but as the tariff policy remains in place, he expects to see the cancellations start to affect cargo further out in June. The forwarder said some ocean carriers are deferring 2025 contract signings until May due to the uncertainty around tariffs. “I think this can get worse,” he said. A US-based executive for an alliance ocean carrier said that while some shippers immediately canceled bookings from China, other major customers are still proceeding with their shipments. But he said caution is increasing the longer Trump’s trade war with China drags out, adding that he expects tariffs will eventually cause more shippers to halt their freight from China. “Orders may be canceled or delayed until there’s more clarity on tariffs, so we’re preparing for a potential [volume] dip in the coming months,” the source said. And if the tariffs on China persist, the issue could reach far beyond volume retractions. According to Sanjay Tejwani, CEO of consulting firm 365 Logistics, the third quarter could bring tough decisions for some shippers moving Chinese cargo. “In Q3, if it remains as-is, some people are not going to ship,” said Tejwani. “Some things are just unaffordable. I am hearing that [some] containers might get abandoned. The importers may not even take delivery because they don’t want to pay the duties.” Benton Kauffman, head of trans-Pacific air and sea logistics at the forwarder DSV Global, told the Journal of Commerce Monday that overall eastbound freight in the trans-Pacific is down about 20%, but 60% of that volume is out of China. “I think in the next two weeks we will see Southeast Asia bounce back,” Kauffman said. A second carrier source said most retailers and direct importers are covered for at least the next three months because they have sufficient inventory to get them well into the summer. After that, they will have to decide how much they have to import and from which countries in the second half of the year, he said. “Eventually they will have to restock,” the carrier executive said. Contact Michael Angell at michael.angell@spglobal.com . Senior Editor Bill Mongelluzzo and Associate Editor Laura Robb contributed to this report.

Trans-Pacific blank sailings set to rise after China bookings drop sharply

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

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Shippers save money, time with automated transportation bidding tools

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

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Filling the Supply Chain Education Gap with LTL Education Courses

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Quarterly Intelligence

<div class="phx-topic abstract-wrapper">The export decline is already showing up in some data, with bookings for US exports to China for the week of April 8–15 down 5.4% from the prior week.</div>

The export decline is already showing up in some data, with bookings for US exports to China for the week of April 8–15 down 5.4% from the prior week.

<div class="phx-topic">Chinese buyers have begun to cancel orders of goods and commodities from US exporters amid the escalating trade conflict between the two nations, and stakeholders expect the cancellations to continue until the battle over tariffs is resolved.Exporters also expect they will need redirect their cargo to other Asian countries to make up for the diminished Chinese market. M. Can Fidan, vice president of business development at New York-based MTS Logistics, told the Journal of Commerce he’s already seen the cancellation of 250 polymers containers and another customer’s entire fertilizer order. “If these tariffs stay, there is no way China will keep buying these products from us,” said Fidan.The export decline is already showing up in data. Bookings for US exports to China for the week of April 8–15 were down 5.4% from the prior week at 17,220 TEUs, according to maritime visibility provider Vizion and data and analytics company Dun &amp; Bradstreet. Two exporters, five forwarders and the head of a shipping group who spoke to the Journal of Commerce said a further drop in China-bound volumes is inevitable if tariffs on China persist, mirroring <a href="https://www.joc.com/article/trans-pacific-blank-sailings-set-to-rise-after-china-bookings-drop-sharply-5984166">the market shift already observed with imports</a>.“If they had contracts to [export containers to China], my assumption would be that a lot of them would likely be canceled,” one exporter said.Another non-vessel-operating common carrier source said they are seeing cancellations on many China-bound exports, especially goods with lower margins where the buyers cannot afford the additional cost. At the same time, the source is seeing sellers of more valuable commodities attempt to pass down the cost to their customers.Meanwhile, several forwarders said demand is strong from other countries that have had their reciprocal US import tariffs paused for 90 days. Shippers and forwarders are forecasting a pickup in export cargo volumes bound for other Southeast Asia countries.“In [the] short term, I think we’re going to see a lot of agriculture sourcing shift [from China] to other countries,” said Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC). Friedmann said he is also seeing canceled China-bound shipments in the agriculture sector. Shippers agreed that US exporters — and farmers in particular — are especially vulnerable to the new tariffs and reciprocal responses from China, adding that the impacts from tariffs implemented during President Donald Trump’s first term can still be felt in many markets. “We’re obviously really concerned,” said Mike Steenhoek, executive director of the Soybean Transportation Coalition. “People have been debating about the impact of these tariffs, [and] some people will say [that we’re speculating] ... It’s not speculation. It’s recollection. When we look at what happened in 2018 and 2019, we still haven’t recovered.”<h3>Cold chain stability, for now</h3>Despite the tariff-related hurdles for many US exporters, there are still calm spots, for now. A forwarding source in refrigerated exports said the cold chain market has been largely stable thus far.“We haven’t really seen such a change when it comes to the tariffs because these are planned so far ahead, and production is scheduled around them,” said the forwarder, who added that impacts to even their China-bound shipments were minimal.Friedmann agreed that many time-sensitive agriculture exports are less flexible, so many shipments are still moving forward. But they are being met with the potential for schedule reliability hurdles. “A lot of the steamship lines are canceling, blanking, delaying, [and] changing routes,” he said. “So, we are not going to have the same ocean transportation options we’re used to. Even if [customers] want to buy it, we’re still going to have increased difficulty delivering it.”Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

Chinese buyers have begun to cancel orders of goods and commodities from US exporters amid the escalating trade conflict between the two nations, and stakeholders expect the cancellations to continue until the battle over tariffs is resolved. Exporters also expect they will need redirect their cargo to other Asian countries to make up for the diminished Chinese market. M. Can Fidan, vice president of business development at New York-based MTS Logistics, told the Journal of Commerce he’s already seen the cancellation of 250 polymers containers and another customer’s entire fertilizer order. “If these tariffs stay, there is no way China will keep buying these products from us,” said Fidan. The export decline is already showing up in data. Bookings for US exports to China for the week of April 8–15 were down 5.4% from the prior week at 17,220 TEUs, according to maritime visibility provider Vizion and data and analytics company Dun & Bradstreet. Two exporters, five forwarders and the head of a shipping group who spoke to the Journal of Commerce said a further drop in China-bound volumes is inevitable if tariffs on China persist, mirroring the market shift already observed with imports . “If they had contracts to [export containers to China], my assumption would be that a lot of them would likely be canceled,” one exporter said. Another non-vessel-operating common carrier source said they are seeing cancellations on many China-bound exports, especially goods with lower margins where the buyers cannot afford the additional cost. At the same time, the source is seeing sellers of more valuable commodities attempt to pass down the cost to their customers. Meanwhile, several forwarders said demand is strong from other countries that have had their reciprocal US import tariffs paused for 90 days. Shippers and forwarders are forecasting a pickup in export cargo volumes bound for other Southeast Asia countries. “In [the] short term, I think we’re going to see a lot of agriculture sourcing shift [from China] to other countries,” said Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC). Friedmann said he is also seeing canceled China-bound shipments in the agriculture sector. Shippers agreed that US exporters — and farmers in particular — are especially vulnerable to the new tariffs and reciprocal responses from China, adding that the impacts from tariffs implemented during President Donald Trump’s first term can still be felt in many markets. “We’re obviously really concerned,” said Mike Steenhoek, executive director of the Soybean Transportation Coalition. “People have been debating about the impact of these tariffs, [and] some people will say [that we’re speculating] ... It’s not speculation. It’s recollection. When we look at what happened in 2018 and 2019, we still haven’t recovered.” Cold chain stability, for now Despite the tariff-related hurdles for many US exporters, there are still calm spots, for now. A forwarding source in refrigerated exports said the cold chain market has been largely stable thus far. “We haven’t really seen such a change when it comes to the tariffs because these are planned so far ahead, and production is scheduled around them,” said the forwarder, who added that impacts to even their China-bound shipments were minimal. Friedmann agreed that many time-sensitive agriculture exports are less flexible, so many shipments are still moving forward. But they are being met with the potential for schedule reliability hurdles. “A lot of the steamship lines are canceling, blanking, delaying, [and] changing routes,” he said. “So, we are not going to have the same ocean transportation options we’re used to. Even if [customers] want to buy it, we’re still going to have increased difficulty delivering it.” Contact Laura Robb at laura.robb@spglobal.com .

US exporters see rise in canceled orders from Chinese buyers amid trade war

<div class="phx-topic abstract-wrapper">US importers and their Mexican logistics and customs partners are experiencing longer wait times when northbound shipments arrive at border towns, and that’s inevitably raising transportation costs and leading to supply chain disruptions.</div>

US importers and their Mexican logistics and customs partners are experiencing longer wait times when northbound shipments arrive at border towns, and that’s inevitably raising transportation costs and leading to supply chain disruptions.

<div class="phx-topic">Monterrey, Mexico — On the US-Mexico border, it’s not just the actual tariff amount that’s making trouble for shippers, but also the delays and increased paperwork associated with those levies, logistics managers said at the Redwood Logistics Cross-Border Logistics Council here. US importers and their Mexican logistics and customs partners are experiencing longer wait times when northbound shipments arrive at border towns such as Nuevo Laredo, the gateway to Laredo, Texas, the largest US land border crossing point. That’s inevitably pushing up transportation costs and leading to supply chain disruptions — whether goods are subject to tariffs or not, shippers and speakers at the event said. How high costs go depends on many factors, but the increases come with a bite. “We’re seeing Mexican soldiers opening trucks, breaking seals, as they search for fentanyl,” Alonso Gonzalez, vice president at GONTOR Logistics, a US and Mexican customs broker in Laredo, said at the conference last week. Mexican President Claudia Sheinbaum deployed her country’s National Guard to the border in February <a href="https://www.npr.org/2025/02/06/nx-s1-5288667/mexico-us-border-tariff-national-guard">to crack down on drug smuggling</a>. That has added another layer of delay and uncertainty for shippers in a suddenly more complex cross-border market. “Everything is being double- or triple-checked at the border when it’s crossing and [US-bound] exports are taking more time,” said Claudia Montemayor, international trade manager at H-E-B, a Texas-based supermarket chain with 70 stores in Mexico. That’s critical to H-E-B, which ships many foods with short shelf lives. Long delays northbound or southbound at the border can reduce the shelf life of products or extend the use of temperature-controlled tractor-trailers, driving transportation costs higher. A Redwood survey of more than 100 shippers found that more logistics managers were concerned about supply chain disruptions (38%) and inflation (37%) than higher tariffs (17%). “There are too many touchpoints when freight gets to the border,” said Jessica Solis, Mexico operations director for Redwood Mexico, a division of Redwood Logistics. In terms of freight volume headed to the US, “it’s been a mini-marathon every month,” she said. February, March and April all had tariff deadlines that <a href="https://www.joc.com/article/disrupted-cross-border-freight-shipping-braces-for-us-tariffs-5974787">pushed goods toward the border</a> in waves, Solis said. Although there’s no deadline for Mexico in May, “we anticipate a crazy end to April,” she said. “This is the peak season now [for 2025].” <h3>Riding the yo-yo </h3>For Dometic, a maker of outdoor products from camping stoves to marine electronics, “it’s been a yo-yo effect the past few months,” said Bill Fogt, the company’s senior vice president for the Americas. Dometic chose not to “pull forward” imports before the 25% tariff on Mexico went into effect. “We didn’t want to take a risk on growing inventories,” Fogt said, adding that has created a “yo-yo” effect. “We were stopping production, and weren’t sending anything across the border, and then we turned it back on two days later,” he said. “It was up and down.” Dometic was caught with too much inventory in 2022 when the market for recreational vehicles dropped post-pandemic, Fogt said. The shipper didn’t want to repeat that. “We kept our inventory low and then we just played the yo-yo game,” he said. The company has also delayed shipments to ensure they’re compliant with the rules of origin in the US-Mexico-Canada Agreement (USMCA). Most of the shippers at the Redwood Mexico conference said their shipments were USMCA-compliant, so far avoiding the 25% duty. However, proving a shipment is USMCA-compliant can be a costly and time-consuming process. Since the tariff was implemented in March, “our work has doubled or tripled,” said GONTOR Logistics’ Gonzalez. “Where we used to need only one HTS [Harmonized Tariff Schedule] code, we now may need as many as four or five codes,” he said. That’s because US Customs and Border Protection (CBP) wants verification that both products and their components conform to the USMCA rules. “A lot of shippers are going back and revisiting their USMCA content,” Gonzalez said. “They’re looking at percentages of aluminum and steel.” It’s as if a shipment once treated as a doll is now seen as a Russian nesting doll, and the origin of each of the interior dolls needs to be exactly accounted for under the USMCA. More frequent audits of customs brokers are likely. “We’ve never seen anything like this,” Gonzalez said. “Some of you have already been charged an increase by your US customs broker and if not, you will be. The rates are all going to go up.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

Monterrey, Mexico — On the US-Mexico border, it’s not just the actual tariff amount that’s making trouble for shippers, but also the delays and increased paperwork associated with those levies, logistics managers said at the Redwood Logistics Cross-Border Logistics Council here. US importers and their Mexican logistics and customs partners are experiencing longer wait times when northbound shipments arrive at border towns such as Nuevo Laredo, the gateway to Laredo, Texas, the largest US land border crossing point. That’s inevitably pushing up transportation costs and leading to supply chain disruptions — whether goods are subject to tariffs or not, shippers and speakers at the event said. How high costs go depends on many factors, but the increases come with a bite. “We’re seeing Mexican soldiers opening trucks, breaking seals, as they search for fentanyl,” Alonso Gonzalez, vice president at GONTOR Logistics, a US and Mexican customs broker in Laredo, said at the conference last week. Mexican President Claudia Sheinbaum deployed her country’s National Guard to the border in February to crack down on drug smuggling . That has added another layer of delay and uncertainty for shippers in a suddenly more complex cross-border market. “Everything is being double- or triple-checked at the border when it’s crossing and [US-bound] exports are taking more time,” said Claudia Montemayor, international trade manager at H-E-B, a Texas-based supermarket chain with 70 stores in Mexico. That’s critical to H-E-B, which ships many foods with short shelf lives. Long delays northbound or southbound at the border can reduce the shelf life of products or extend the use of temperature-controlled tractor-trailers, driving transportation costs higher. A Redwood survey of more than 100 shippers found that more logistics managers were concerned about supply chain disruptions (38%) and inflation (37%) than higher tariffs (17%). “There are too many touchpoints when freight gets to the border,” said Jessica Solis, Mexico operations director for Redwood Mexico, a division of Redwood Logistics. In terms of freight volume headed to the US, “it’s been a mini-marathon every month,” she said. February, March and April all had tariff deadlines that pushed goods toward the border in waves, Solis said. Although there’s no deadline for Mexico in May, “we anticipate a crazy end to April,” she said. “This is the peak season now [for 2025].” Riding the yo-yo For Dometic, a maker of outdoor products from camping stoves to marine electronics, “it’s been a yo-yo effect the past few months,” said Bill Fogt, the company’s senior vice president for the Americas. Dometic chose not to “pull forward” imports before the 25% tariff on Mexico went into effect. “We didn’t want to take a risk on growing inventories,” Fogt said, adding that has created a “yo-yo” effect. “We were stopping production, and weren’t sending anything across the border, and then we turned it back on two days later,” he said. “It was up and down.” Dometic was caught with too much inventory in 2022 when the market for recreational vehicles dropped post-pandemic, Fogt said. The shipper didn’t want to repeat that. “We kept our inventory low and then we just played the yo-yo game,” he said. The company has also delayed shipments to ensure they’re compliant with the rules of origin in the US-Mexico-Canada Agreement (USMCA). Most of the shippers at the Redwood Mexico conference said their shipments were USMCA-compliant, so far avoiding the 25% duty. However, proving a shipment is USMCA-compliant can be a costly and time-consuming process. Since the tariff was implemented in March, “our work has doubled or tripled,” said GONTOR Logistics’ Gonzalez. “Where we used to need only one HTS [Harmonized Tariff Schedule] code, we now may need as many as four or five codes,” he said. That’s because US Customs and Border Protection (CBP) wants verification that both products and their components conform to the USMCA rules. “A lot of shippers are going back and revisiting their USMCA content,” Gonzalez said. “They’re looking at percentages of aluminum and steel.” It’s as if a shipment once treated as a doll is now seen as a Russian nesting doll, and the origin of each of the interior dolls needs to be exactly accounted for under the USMCA. More frequent audits of customs brokers are likely. “We’ve never seen anything like this,” Gonzalez said. “Some of you have already been charged an increase by your US customs broker and if not, you will be. The rates are all going to go up.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

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Tariff uncertainty pushing up transportation costs at US-Mexico border

<div class="phx-topic abstract-wrapper">While no surge in volume has been reported on the trade lane, capacity deployment data shows ocean carriers are expecting an increase in demand over the coming weeks as shippers use the 90-day tariff pause to advance US orders.</div>

While no surge in volume has been reported on the trade lane, capacity deployment data shows ocean carriers are expecting an increase in demand over the coming weeks as shippers use the 90-day tariff pause to advance US orders.

<div class="phx-topic">The 90-day pause in US tariffs on its non-China trading partners is not yet causing a significant increase in frontloading on the trans-Atlantic, but there are signs of rising demand on the westbound trade lane. For a start, there have been limited blank sailings announced on the trans-Atlantic in the coming weeks, with just 7,124 TEUs to be withdrawn from North Europe to the US East and Gulf coasts in May, according to ocean visibility provider eeSea. “It seems as if carriers are pushing up capacity to cater for whatever frontloading may be needed by European exporters,” Peter Sand, chief analyst at rate benchmarking platform Xeneta, told the Journal of Commerce. “By reducing the number of blank sailings, the offered capacity is close to an all-time high, which is indicative of fairly strong demand right now as spot rates go up,” Sand added. “The 90-day pause in tariffs-on/tariffs-off is seen by some shippers as an opportunity to fill inventories while hoping for a more permanent situation without flip-flopping political proposals.” Data from eeSea shows capacity of 340,616 TEUs will be deployed in May on the westbound trans-Atlantic, a 1.4% increase compared with April. But the blanked capacity in May is significantly less than the 17,256 TEUs withdrawn in April <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="dfd67cef-2540-4a5a-8d1a-6185d4324049"></dynamic-object></div>Another potential sign of shippers advancing orders is an increase in rates. After months of decline, the spot market on the North Europe-US East Coast trade is up almost 4% since late March, reversing the downward trend following <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">the brief strike at ports along the East and Gulf coasts</a> last October. Spot rates are currently at $2,162 per FEU, according to Xeneta. The third sign of an expected surge in trans-Atlantic demand comes from the peak season surcharges (PSS) being levied by some carriers. Mediterranean Shipping Co., one of the most active carriers on the trade lane, has announced a $1,000-per-FEU PSS to take effect on May 13 from North Europe to the US, Canada and Mexico. Peak season surcharges are also planned for the Mediterranean to North America trade lane from May 3. Hapag-Lloyd will add $750/FEU, while MSC and CMA CGM will implement a $1,000/FEU PSS. <h3>European ports monitoring for volume shifts </h3>On March 12, the US applied a 25% tariff to iron, steel, aluminum and derived products from around the world. On April 3, that was extended to include cars and car parts, also at 25%, with an additional 20% increase on goods originating from the European Union. Then on April 9, the Trump administration announced a 90-day temporary pause for countries open to negotiations, leaving the 10% across-the-board baseline tariff on Europe in place during the negotiating period. The European Union has also suspended its reciprocal tariffs on US exports such as Harley-Davidson motorcycles, bourbon whiskey and boats. A second phase of tariffs due to take effect April 15 has also been suspended for the 90-day period. Those target industrial and agricultural products from the US, including steel and aluminum, textiles, leather goods, household appliances, tools, plastics, wood products and foodstuffs such as poultry, beef, seafood, nuts, dairy, sugar and vegetables. With the 90-day window open to shippers, Europe’s port of Antwerp-Bruges is watching closely for changes in trade flows with the US, the Belgian hub’s second-largest trading partner. In 2024, exports to the US totaled 613,437 TEUs, consisting mainly of auto and machinery parts from Germany, chemicals, vehicles, food, plastics and pharmaceuticals. Imports from the US included plastics, polymers, chemicals, rubber, vehicles, food and pharmaceuticals. “So far, there have been no significant traffic shifts directly linked to the recent measures,” the port of Antwerp-Bruges said in a statement Wednesday. “While some companies are acting in anticipation, a marked increase in exports to the US has not materialized.” While the direct impact of US tariffs was limited “for now,” Antwerp-Bruges warned that could change quickly amid geopolitical tensions and further development in trade tariffs. Meanwhile, Maersk has issued a customer advisory warning of increasing congestion levels and operational disruptions at several ports across Northern Europe, specifically Antwerp and Bremerhaven, adding delays to ships on both Asia-Europe and trans-Atlantic trades. “This is a result of multiple factors affecting the ports, such as strike actions, phase-in and phase-out plans of ocean networks across the industry, low water levels on continental hinterland arteries and the lower than usual labor availability ahead of the Easter holidays,” the carrier advised. “The combination of these factors is leading to additional yard density and increased container dwelling above the ports’ operational capacity,” Maersk added. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The 90-day pause in US tariffs on its non-China trading partners is not yet causing a significant increase in frontloading on the trans-Atlantic, but there are signs of rising demand on the westbound trade lane. For a start, there have been limited blank sailings announced on the trans-Atlantic in the coming weeks, with just 7,124 TEUs to be withdrawn from North Europe to the US East and Gulf coasts in May, according to ocean visibility provider eeSea. “It seems as if carriers are pushing up capacity to cater for whatever frontloading may be needed by European exporters,” Peter Sand, chief analyst at rate benchmarking platform Xeneta, told the Journal of Commerce. “By reducing the number of blank sailings, the offered capacity is close to an all-time high, which is indicative of fairly strong demand right now as spot rates go up,” Sand added. “The 90-day pause in tariffs-on/tariffs-off is seen by some shippers as an opportunity to fill inventories while hoping for a more permanent situation without flip-flopping political proposals.” Data from eeSea shows capacity of 340,616 TEUs will be deployed in May on the westbound trans-Atlantic, a 1.4% increase compared with April. But the blanked capacity in May is significantly less than the 17,256 TEUs withdrawn in April Another potential sign of shippers advancing orders is an increase in rates. After months of decline, the spot market on the North Europe-US East Coast trade is up almost 4% since late March, reversing the downward trend following the brief strike at ports along the East and Gulf coasts last October. Spot rates are currently at $2,162 per FEU, according to Xeneta. The third sign of an expected surge in trans-Atlantic demand comes from the peak season surcharges (PSS) being levied by some carriers. Mediterranean Shipping Co., one of the most active carriers on the trade lane, has announced a $1,000-per-FEU PSS to take effect on May 13 from North Europe to the US, Canada and Mexico. Peak season surcharges are also planned for the Mediterranean to North America trade lane from May 3. Hapag-Lloyd will add $750/FEU, while MSC and CMA CGM will implement a $1,000/FEU PSS. European ports monitoring for volume shifts On March 12, the US applied a 25% tariff to iron, steel, aluminum and derived products from around the world. On April 3, that was extended to include cars and car parts, also at 25%, with an additional 20% increase on goods originating from the European Union. Then on April 9, the Trump administration announced a 90-day temporary pause for countries open to negotiations, leaving the 10% across-the-board baseline tariff on Europe in place during the negotiating period. The European Union has also suspended its reciprocal tariffs on US exports such as Harley-Davidson motorcycles, bourbon whiskey and boats. A second phase of tariffs due to take effect April 15 has also been suspended for the 90-day period. Those target industrial and agricultural products from the US, including steel and aluminum, textiles, leather goods, household appliances, tools, plastics, wood products and foodstuffs such as poultry, beef, seafood, nuts, dairy, sugar and vegetables. With the 90-day window open to shippers, Europe’s port of Antwerp-Bruges is watching closely for changes in trade flows with the US, the Belgian hub’s second-largest trading partner. In 2024, exports to the US totaled 613,437 TEUs, consisting mainly of auto and machinery parts from Germany, chemicals, vehicles, food, plastics and pharmaceuticals. Imports from the US included plastics, polymers, chemicals, rubber, vehicles, food and pharmaceuticals. “So far, there have been no significant traffic shifts directly linked to the recent measures,” the port of Antwerp-Bruges said in a statement Wednesday. “While some companies are acting in anticipation, a marked increase in exports to the US has not materialized.” While the direct impact of US tariffs was limited “for now,” Antwerp-Bruges warned that could change quickly amid geopolitical tensions and further development in trade tariffs. Meanwhile, Maersk has issued a customer advisory warning of increasing congestion levels and operational disruptions at several ports across Northern Europe, specifically Antwerp and Bremerhaven, adding delays to ships on both Asia-Europe and trans-Atlantic trades. “This is a result of multiple factors affecting the ports, such as strike actions, phase-in and phase-out plans of ocean networks across the industry, low water levels on continental hinterland arteries and the lower than usual labor availability ahead of the Easter holidays,” the carrier advised. “The combination of these factors is leading to additional yard density and increased container dwelling above the ports’ operational capacity,” Maersk added. Contact Greg Knowler at greg.knowler@spglobal.com .

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