<div class="phx-topic abstract-wrapper">What if ocean carriers offered some hedging solutions to pricing volatility that differentiated them from their competition and for which they could charge a fair fee, wonders Jeremy Masters, managing director at consultancy Shipping Masters.</div>

What if ocean carriers offered some hedging solutions to pricing volatility that differentiated them from their competition and for which they could charge a fair fee, wonders Jeremy Masters, managing director at consultancy Shipping Masters.

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<div>As the liner sector prepares for another round of reorganizing its products, the main preoccupation is what kind of future physical product can be offered in terms of scope, frequency and reliability. Carrier realignments may be an opportunity — willingly embraced or forced — for carriers in need of an edge to offer something new in the market. This won’t come easily because the liner industry, which is so dynamic in developing its physical assets, is comparatively conservative about how its ocean services are differentiated and sold. Volatility is certainly always present in liner shipping but has been even more...

As the liner sector prepares for another round of reorganizing its products, the main preoccupation is what kind of future physical product can be offered in terms of scope, frequency and reliability. Carrier realignments may be an opportunity — willingly embraced or forced — for carriers in need of an edge to offer something new in the market. This won’t come easily because the liner industry, which is so dynamic in developing its physical assets, is comparatively conservative about how its ocean services are differentiated and sold. Volatility is certainly always present in liner shipping but has been even more abundant in recent years. What if carriers offered some hedging solutions to this volatility that differentiated them from their competition and for which they could charge a fair fee? If you visit an airline or travel website it’s generally possible to fix a price and a seat up to 12 months ahead. As a rule of thumb, you are rewarded with cheaper prices for booking well in advance (although peak periods still have a premium). You pay your money up front and take the risk that you will need to amend arrangements for a fee. Is this kind of model combining space protection and fixed forward pricing possible in liner shipping? A beneficial cargo owner (BCO) that ships 100 TEUs a week, commits 50% to a service contract and does 50% spot is already hedging to a degree and may be reluctant to pay now for services in three to six months. If, however, the freight rates the BCO can obtain for committing boxes in three months’ time are, for example, 20% cheaper than today’s spot market (the percentage would need to be variable depending on where the spot market stood in the historical cycle), and space is guaranteed within a two-week window (allowing some flexibility for future schedule volatility). Also, say 15% of the freight is paid at the front end as a non-refundable deposit — could this be attractive to both carrier and BCO? The attraction from the carriers’ point of view is clearly that they lock in spot cargo at a freight rate that is still acceptable if the market goes up and is attractive if the market goes down with the worst-case scenario that they pocket the 15% and sell the space at current rates. It would also allow them to seamlessly tweak their forward pricing depending on expected utilizations. The attraction from the BCOs’ point of view would be that they lock in space at a rate that is relatively attractive versus today’s spot market, with the worst case being they sacrifice the 15% and buy in the spot market at lower rates. They can also spread their risk by pursuing rolling forward purchasing rather than being heavily subject to the short-term vagaries of the market at the time of service contract negotiations. Of course, the BCO will want to do this with a reputable carrier that they expect to meet their commitments, but if airlines can find a model that motivates passengers to commit their personal money now for something up to a year ahead, it shouldn’t be impossible to build a credible model. Secondhand ship price volatility A second volatility area for carriers to focus on is the intersection of highly variable secondhand ship prices and the variable strength and rate profile of individual trades. Generally, carriers buy second ships with the expectation of retaining them for their own services, but that is not the only possibility. Carriers have an advantage over non-operating owners in that they can find the best fit to deploy assets in the short and medium term. For the fleet-of-foot carrier that is willing to be more opportunistic than current models pursue, there is the possibility to buy secondhand ships when prices are comparatively low and charter them out or deploy them on a short-term and fluid basis and sell them at an opportune time. This model would reach fruition with disposal of the units when the secondhand market is up. This could be a cycle from as low as six months to as high as two or three years. This would need to be operated as a separate profit center, with the carriers’ own trade groups being one of their potential clients. But it’s readily doable. Volatility offers the possibility then for new approaches. New models are not for the faint of heart, but as we learn from the airline sector, results can be very exciting for innovators. Contact Jeremy Masters at jeremy@shippingmastershk.com .

Maritime

Air Cargo

Airline pricing models offer alternative for container shipping

<div class="phx-topic abstract-wrapper">Weather-related port congestion in January and February caused higher terminal storage costs while war in the Middle East raised operating expenses late in the quarter.</div>

Weather-related port congestion in January and February caused higher terminal storage costs while war in the Middle East raised operating expenses late in the quarter.

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<div class="phx-topic">Hapag-Lloyd recorded a $300 million loss in the first quarter as severe winter weather on both sides of the Atlantic, rising energy costs and sharply declining rates dragged down the carrier’s earnings. It was “an unsatisfactory start to the year,” Hapag-Lloyd CEO Rolf Habben Jansen told reporters during a results briefing Wednesday. “We had adverse weather conditions in north and south Europe in January and February, and similar conditions on the East Coast of the US, and we are heavily exposed to those markets,” he said. Although bunker prices fell in the first quarter because of the time lag between purchase and consumption, higher terminal storage costs stacked up from weather-related port congestion in January and February, with Middle East-related disruptions adding to March operating costs. Hapag-Lloyd's first-quarter volume was down 0.7% at 3.2 million TEUs while average freight rates fell 10% year over year to $1,330 per TEU. The weak performance in the liner shipping segment dragged Hapag’s revenue down 7.5% to $4.9 billion. Earnings before interest, taxes, depreciation and amortization (EBITDA) fell 54% to $500 million and EBIT was down 60% at $200 million. The $300 million net loss was down from a $500 million profit in Q1 2025. War in the Middle East drove up energy prices from the end of February. Habben Jansen said the carrier was bunkering 100,000 tons of fuel a week, which was adding $50 million to $60 million to its weekly bills. "The situation in the Middle East caused significant extra cost from March, which we hope to recover through surcharges in the second quarter,” the CEO said. “A significant increase in bunker cost is expected in Q2 which will be covered by our emergency fuel surcharge and the regular marine fuel recovery mechanism.” <h3>Recovering rising bunker costs </h3>Half of the carrier’s volume is under contract where surcharges enable rising fuel costs to be fully recovered. On the spot market, Habben Jansen said rising rates through the peak season will factor in the bunker costs. “Looking at the sheer magnitude of the additional costs that we face, I think in most cases we have sensible discussions with customers, and that can be that we either come up with an emergency additional charge, or in some cases we move from a quarterly adjustment in the bunker formula to a monthly adjustment,” he said. While volume was flat compared to the first quarter of last year, the carrier was seeing solid market demand into May and beyond, and Habben Jansen said the industry was on track for a “decent” peak season. ”We don’t see any real softening in demand for cargo at this point,” he said. “When we look at forward bookings, when we look at futures markets, when we talk to customers, there is an expectation that we will have a pretty decent peak season.” That’s not a view necessarily shared by the National Retail Federation, <a href="https://www.joc.com/article/weak-consumer-confidence-rising-inflation-dim-peak-season-hopes-6217405">which indicated on Friday</a> that peak season for US imports will be less than impressive due to weak consumer confidence, rising inflation, and retailers hesitant to launch any meaningful restocking given a hazy economic outlook. <h3>HMM’s Q1 earnings also fall </h3>Meanwhile, South Korea carrier HMM also reported a sharp drop in first-quarter earnings as falling rates and rising costs from the Middle East war weighed on its results. Revenue fell 4.8% year over year to $1.8 million, operating profit declined 56% to $181 million and first-quarter net profit of $237 million was down 52%, HMM said in a statement Wednesday. The carrier warned of growing market uncertainty driven by increasing vessel capacity from a bloated order book, rising costs associated with the Middle East war, and US tariff policies. "HMM will implement fuel cost optimization strategies to mitigate the impact of prolonged high oil prices,” the carrier noted. “HMM also plans to launch new routes to markets like Africa by adopting a hub-and-spoke strategy, while securing new demand in regions such as Southeast Asia.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Hapag-Lloyd recorded a $300 million loss in the first quarter as severe winter weather on both sides of the Atlantic, rising energy costs and sharply declining rates dragged down the carrier’s earnings. It was “an unsatisfactory start to the year,” Hapag-Lloyd CEO Rolf Habben Jansen told reporters during a results briefing Wednesday. “We had adverse weather conditions in north and south Europe in January and February, and similar conditions on the East Coast of the US, and we are heavily exposed to those markets,” he said. Although bunker prices fell in the first quarter because of the time lag between purchase and consumption, higher terminal storage costs stacked up from weather-related port congestion in January and February, with Middle East-related disruptions adding to March operating costs. Hapag-Lloyd's first-quarter volume was down 0.7% at 3.2 million TEUs while average freight rates fell 10% year over year to $1,330 per TEU. The weak performance in the liner shipping segment dragged Hapag’s revenue down 7.5% to $4.9 billion. Earnings before interest, taxes, depreciation and amortization (EBITDA) fell 54% to $500 million and EBIT was down 60% at $200 million. The $300 million net loss was down from a $500 million profit in Q1 2025. War in the Middle East drove up energy prices from the end of February. Habben Jansen said the carrier was bunkering 100,000 tons of fuel a week, which was adding $50 million to $60 million to its weekly bills. "The situation in the Middle East caused significant extra cost from March, which we hope to recover through surcharges in the second quarter,” the CEO said. “A significant increase in bunker cost is expected in Q2 which will be covered by our emergency fuel surcharge and the regular marine fuel recovery mechanism.” Recovering rising bunker costs Half of the carrier’s volume is under contract where surcharges enable rising fuel costs to be fully recovered. On the spot market, Habben Jansen said rising rates through the peak season will factor in the bunker costs. “Looking at the sheer magnitude of the additional costs that we face, I think in most cases we have sensible discussions with customers, and that can be that we either come up with an emergency additional charge, or in some cases we move from a quarterly adjustment in the bunker formula to a monthly adjustment,” he said. While volume was flat compared to the first quarter of last year, the carrier was seeing solid market demand into May and beyond, and Habben Jansen said the industry was on track for a “decent” peak season. ”We don’t see any real softening in demand for cargo at this point,” he said. “When we look at forward bookings, when we look at futures markets, when we talk to customers, there is an expectation that we will have a pretty decent peak season.” That’s not a view necessarily shared by the National Retail Federation, which indicated on Friday that peak season for US imports will be less than impressive due to weak consumer confidence, rising inflation, and retailers hesitant to launch any meaningful restocking given a hazy economic outlook. HMM’s Q1 earnings also fall Meanwhile, South Korea carrier HMM also reported a sharp drop in first-quarter earnings as falling rates and rising costs from the Middle East war weighed on its results. Revenue fell 4.8% year over year to $1.8 million, operating profit declined 56% to $181 million and first-quarter net profit of $237 million was down 52%, HMM said in a statement Wednesday. The carrier warned of growing market uncertainty driven by increasing vessel capacity from a bloated order book, rising costs associated with the Middle East war, and US tariff policies. "HMM will implement fuel cost optimization strategies to mitigate the impact of prolonged high oil prices,” the carrier noted. “HMM also plans to launch new routes to markets like Africa by adopting a hub-and-spoke strategy, while securing new demand in regions such as Southeast Asia.” Contact Greg Knowler at greg.knowler@spglobal.com .

Container lines

Container Shipping News

Hapag-Lloyd posts Q1 net loss in ‘unsatisfactory’ start to 2026

<div class="phx-topic abstract-wrapper">If current market conditions continue, analyst Larry Gross believes there will be fresh gains in domestic intermodal share. </div>

If current market conditions continue, analyst Larry Gross believes there will be fresh gains in domestic intermodal share.

<div class="phx-topic">Last month, <a href="https://www.joc.com/article/tailwinds-for-us-intermodal-volume-growth-strengthening-analyst-6206045">I wrote about</a> the gathering tailwinds for domestic intermodal. With truck rates rising under the pressure of tighter driver supply and skyrocketing diesel prices, the intermodal alternative should become more attractive. When they arrived, the March numbers from the Intermodal Association of North America (IANA) confirmed the story. Domestic intermodal across North America was up 8.4% from the prior year, and for loads originating and terminating within the US, the gain was even stronger at 9.3%. This led me to ask another question – will we finally see an upturn in domestic intermodal market share? Looking at those numbers, the answer for the moment appears to be: not yet. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6219923_0.1.jpg"></img></div>My market share calculations have changed a bit this year, because the source of the truck data is new. The truck numbers are now being provided by the highly respected commercial vehicle and transportation market analytical powerhouse ACT Research. US dry-van and reefer loads are compiled monthly by mileage range. The lowest relevant mileage range is 301 to 600 miles. This raises a question: Which truck mileage range should we use to compute intermodal market share – 301 miles and more, or 600 miles and more? The decision has a huge effect on the share calculation, because, according to ACT, almost half of the dry-van and reefer truckloads that are moving distances of over 300 miles lie in that short-haul 301-600-mile range. For long-haul intermodal, the percentage is much lower, with significantly less than 10% of domestic intermodal activity moving 600 miles or less. Neither approach is perfect. Using the 300-mile cutoff has a dramatic downward effect on intermodal market share, while comparing all domestic intermodal to the 601-plus mile market artificially boosts intermodal market share by a bit. Rather than making the choice, the chart included here presents the data both ways. After all, we are far more interested in the trend, i.e. whether the number is rising or falling, than the actual number, which is only an estimate with a pretty decent margin of error. While the numbers are slightly different from my previous calculations, the message is relatively unchanged: domestic intermodal share is down from previous levels. Using the 601-plus-mile figures, share, which averaged 6.5% in 2013, averaged 5.7% over the 12-month period ending in March 2026. Further, it did not change much in 2025. However, these revised numbers do show that a modest gain occurred in 2023 and 2024 versus the trough in 2022, at least when the 601-plus-mile truck numbers are used for the comparison. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="fe43f201-73c6-4a49-a33e-7b3a3a655f43"></dynamic-object></div>Where to from here? I believe that if current conditions continue, then we will see domestic intermodal market share gains. It may simply be too soon to see it in the data. Supply chains, while more agile than they used to be, still don’t turn on a dime. The intermodal growth baton is being handed off from international to domestic. With international loads flagging, the domestic improvement will come just in time. Then the industry will face an operational test, and we will see if lessons have been learned. Ample supplies of domestic containers and chassis remain available to handle higher volumes. Will the railroads be able to cope with increased activity without deterioration in intermodal service levels? In my experience, the four most dangerous words in forecasting are: “this time it’s different.” History says that when volume increases, the railroads lack the surge capacity required and have a tough time catching up. The railroads say that won’t happen this time. On this, I am optimistic, but still very cautious. I don’t think it will take very long to see where things are headed. Larry Gross is president and founder of Gross Transportation Consulting. Contact him at <a href="mailto:lawrencejgross@gmail.com">lawrencejgross@gmail.com</a>. </div>

Last month, I wrote about the gathering tailwinds for domestic intermodal. With truck rates rising under the pressure of tighter driver supply and skyrocketing diesel prices, the intermodal alternative should become more attractive. When they arrived, the March numbers from the Intermodal Association of North America (IANA) confirmed the story. Domestic intermodal across North America was up 8.4% from the prior year, and for loads originating and terminating within the US, the gain was even stronger at 9.3%. This led me to ask another question – will we finally see an upturn in domestic intermodal market share? Looking at those numbers, the answer for the moment appears to be: not yet. My market share calculations have changed a bit this year, because the source of the truck data is new. The truck numbers are now being provided by the highly respected commercial vehicle and transportation market analytical powerhouse ACT Research. US dry-van and reefer loads are compiled monthly by mileage range. The lowest relevant mileage range is 301 to 600 miles. This raises a question: Which truck mileage range should we use to compute intermodal market share – 301 miles and more, or 600 miles and more? The decision has a huge effect on the share calculation, because, according to ACT, almost half of the dry-van and reefer truckloads that are moving distances of over 300 miles lie in that short-haul 301-600-mile range. For long-haul intermodal, the percentage is much lower, with significantly less than 10% of domestic intermodal activity moving 600 miles or less. Neither approach is perfect. Using the 300-mile cutoff has a dramatic downward effect on intermodal market share, while comparing all domestic intermodal to the 601-plus mile market artificially boosts intermodal market share by a bit. Rather than making the choice, the chart included here presents the data both ways. After all, we are far more interested in the trend, i.e. whether the number is rising or falling, than the actual number, which is only an estimate with a pretty decent margin of error. While the numbers are slightly different from my previous calculations, the message is relatively unchanged: domestic intermodal share is down from previous levels. Using the 601-plus-mile figures, share, which averaged 6.5% in 2013, averaged 5.7% over the 12-month period ending in March 2026. Further, it did not change much in 2025. However, these revised numbers do show that a modest gain occurred in 2023 and 2024 versus the trough in 2022, at least when the 601-plus-mile truck numbers are used for the comparison. Where to from here? I believe that if current conditions continue, then we will see domestic intermodal market share gains. It may simply be too soon to see it in the data. Supply chains, while more agile than they used to be, still don’t turn on a dime. The intermodal growth baton is being handed off from international to domestic. With international loads flagging, the domestic improvement will come just in time. Then the industry will face an operational test, and we will see if lessons have been learned. Ample supplies of domestic containers and chassis remain available to handle higher volumes. Will the railroads be able to cope with increased activity without deterioration in intermodal service levels? In my experience, the four most dangerous words in forecasting are: “this time it’s different.” History says that when volume increases, the railroads lack the surge capacity required and have a tough time catching up. The railroads say that won’t happen this time. On this, I am optimistic, but still very cautious. I don’t think it will take very long to see where things are headed. Larry Gross is president and founder of Gross Transportation Consulting. Contact him at lawrencejgross@gmail.com .

Trucking News

Rail News

Surface

Domestic intermodal share improvement remains elusive, for now

<div class="phx-topic abstract-wrapper">The carrier is increasing capacity in response to growth in Indian imports from China and other Asian production markets in recent years, propelled by input sourcing to support rapid industrial development.</div>

The carrier is increasing capacity in response to growth in Indian imports from China and other Asian production markets in recent years, propelled by input sourcing to support rapid industrial development.

<div class="phx-topic">Maersk is restarting an intra-Asia service that was suspended in late 2020 as part of widespread network shakeups in the aftermath of the pandemic. The standalone FI2 service connecting key ports in China, Malaysia, India and Pakistan is set to return to the trade lane in early June, complementing the FI3 that the Danish carrier still operates in a revamped format. Six ships in the 3,400- to 4,500-TEU range will be deployed on the FI2 to provide a weekly rotation, calling at Shanghai, Ningbo, Nansha, Tanjung Pelepas, Nhava Sheva, Pipavav, and Port Qasim (Karachi). The first sailing from Shanghai is planned for June 4. “Designed to strengthen network coverage and offer greater flexibility, the FI2 service provides enhanced connectivity from Southern and Central China to key, fast-growing markets in Northwest India and Pakistan,” Maersk said in a customer advisory. The FI3 has stops at Qingdao, Xingang, Busan, Tanjung Pelepas, Nhava Sheva, Pipavav, Mundra and Karachi. Maersk is increasing capacity in response to growth in Indian imports from China and other Asian production markets in recent years, propelled by input sourcing to support rapid industrial development. Indian imports from China by value were up 16% year over year in the 2025-26 fiscal year that ended in March, according to official data. Logistics industry executives view China–India trade as a fast-growing lane, estimating double-digit growth in volumes over the past year. They expect the boom to accelerate as multinational manufacturers pursuing a China-plus-one strategy add more production lines in India. Japanese automaker Toyota has announced plans to set up a new sports utility vehicle (SUV) manufacturing plant in the western Indian state of Maharashtra, its fourth in the country. <h3>Middle East chokepoints shift focus to intra-Asia </h3>Ashish Sheth, chairman and managing director of Sarjak Container Lines, believes Persian Gulf chokepoints such as the Strait of Hormuz and Red Sea have refueled the strategic importance of intra-Asia trades for India. “China–India container trade continues to show strong structural growth in 2026, driven by electronics, machinery, chemicals and manufacturing inputs,” Sheth told the Journal of Commerce. Cargo booking rates from China to India have risen in recent months, with average mainline Shanghai–Nhava Sheva rates now at $1,300 to $1,400 per FEU, industry data indicates. Most mainliners have already positioned themselves alongside niche intra-Asia operators to capture fresh demand gains. In late 2025, CMA CGM began a regional loop linking Thailand, Vietnam and Malaysia to Chennai in southeast India with extended reach for western India and Pakistan via feeder connectivity. Ocean Network Express and HMM have also cemented their intra-Asia presence out of India through vessel-sharing or slot partnerships. Chinese-backed CU Lines seems to be another emerging capacity participant on the trade lane, rivaling the predominant regional carriers like Wan Hai Lines, Cosco Shipping, Pacific International Lines, Evergreen, Yang Ming and Interasia Lines. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

Maersk is restarting an intra-Asia service that was suspended in late 2020 as part of widespread network shakeups in the aftermath of the pandemic. The standalone FI2 service connecting key ports in China, Malaysia, India and Pakistan is set to return to the trade lane in early June, complementing the FI3 that the Danish carrier still operates in a revamped format. Six ships in the 3,400- to 4,500-TEU range will be deployed on the FI2 to provide a weekly rotation, calling at Shanghai, Ningbo, Nansha, Tanjung Pelepas, Nhava Sheva, Pipavav, and Port Qasim (Karachi). The first sailing from Shanghai is planned for June 4. “Designed to strengthen network coverage and offer greater flexibility, the FI2 service provides enhanced connectivity from Southern and Central China to key, fast-growing markets in Northwest India and Pakistan,” Maersk said in a customer advisory. The FI3 has stops at Qingdao, Xingang, Busan, Tanjung Pelepas, Nhava Sheva, Pipavav, Mundra and Karachi. Maersk is increasing capacity in response to growth in Indian imports from China and other Asian production markets in recent years, propelled by input sourcing to support rapid industrial development. Indian imports from China by value were up 16% year over year in the 2025-26 fiscal year that ended in March, according to official data. Logistics industry executives view China–India trade as a fast-growing lane, estimating double-digit growth in volumes over the past year. They expect the boom to accelerate as multinational manufacturers pursuing a China-plus-one strategy add more production lines in India. Japanese automaker Toyota has announced plans to set up a new sports utility vehicle (SUV) manufacturing plant in the western Indian state of Maharashtra, its fourth in the country. Middle East chokepoints shift focus to intra-Asia Ashish Sheth, chairman and managing director of Sarjak Container Lines, believes Persian Gulf chokepoints such as the Strait of Hormuz and Red Sea have refueled the strategic importance of intra-Asia trades for India. “China–India container trade continues to show strong structural growth in 2026, driven by electronics, machinery, chemicals and manufacturing inputs,” Sheth told the Journal of Commerce. Cargo booking rates from China to India have risen in recent months, with average mainline Shanghai–Nhava Sheva rates now at $1,300 to $1,400 per FEU, industry data indicates. Most mainliners have already positioned themselves alongside niche intra-Asia operators to capture fresh demand gains. In late 2025, CMA CGM began a regional loop linking Thailand, Vietnam and Malaysia to Chennai in southeast India with extended reach for western India and Pakistan via feeder connectivity. Ocean Network Express and HMM have also cemented their intra-Asia presence out of India through vessel-sharing or slot partnerships. Chinese-backed CU Lines seems to be another emerging capacity participant on the trade lane, rivaling the predominant regional carriers like Wan Hai Lines, Cosco Shipping, Pacific International Lines, Evergreen, Yang Ming and Interasia Lines. Contact Bency Mathew at bencyvmathew@gmail.com .

Asia-Europe

International ports

Maersk joins race to target burgeoning China-India trade with capacity boost

<div class="phx-topic abstract-wrapper">Without the funding element, shipping groups and environmental campaigners argue that the so-called net-zero framework will be unable to provide crucial funding for shipping’s decarbonization journey.</div>

Without the funding element, shipping groups and environmental campaigners argue that the so-called net-zero framework will be unable to provide crucial funding for shipping’s decarbonization journey.

<div class="phx-topic">The pricing mechanism that is a core pillar of the International Maritime Organization’s (IMO) net-zero framework is “exceedingly unlikely” to be accepted by the US, according to maritime classification society DNV. At a meeting of the IMO’s Marine Environment Protection Committee (MEPC 84) in London in late April, Washington reiterated its opposition to the economic mechanism in the net-zero framework (NZF) that is meant to provide crucial funding for shipping’s decarbonization journey. “The fund mechanism is, in our assessment, dead in the water,” Eirik Nyhus, DNV’s vice president and director of environment, told a webcast organized by the group last week. “We see it as exceedingly unlikely that the US will accept the economic aspects of (the) net-zero framework in any form.” Achieving the IMO target of full decarbonization by or around 2050 with benchmark targets set along the way will require narrowing the wide price gap that exists between fossil fuels and the low- or zero-emission alternatives, which by its very nature will require making fossil fuels more expensive. But without the funding element, shipping groups and environmental campaigners argue that the NZF will become irrelevant. A report from the Global Maritime Forum earlier this year warned that any removal of the economic element— designed to make green technologies cheaper than high-emission alternatives — would also remove the likelihood of effective enforcement. “A standalone global fuel standard with no economic elements would likely merely replicate what already exists in the carbon intensity indicator (CII) mechanism, which requires ships with repeated non-compliance at a certain level to file a corrective action plan,” the report noted. <h3>US reiterates opposition </h3>The Trump administration made clear its opposition to the net-zero framework at a contentious MEPC 83 meeting in October last year, even threatening to leave the IMO over the issue. That <a href="https://www.joc.com/article/fmcs-dibella-brings-anti-net-zero-message-to-imo-london-meeting-6210952">anti-NZF message was reinforced by Federal Maritime Commission (FMC) Chairman Laura DiBella</a> when she attended the most recent MEPC meeting in London two weeks ago. “The NZF is an unnecessary tax on US shippers and vessels operating in international waters,” DiBella said in a statement before attending the meeting. “The NZF would cost the maritime industry billions of dollars annually. As the largest consumer of imported goods, these costs will be directly passed onto US consumers.” The IMO’s NZF is aimed at reducing greenhouse gas (GHG) emissions from ships, in line with its 2023 GHG Strategy. It aims to set global standards for shipping’s carbon emissions and create a greenhouse gas pricing mechanism for ocean carriers to sharply reduce emissions by 2050. The NZF took a big step forward with the formal adoption of <a href="https://www.joc.com/article/imo-sets-out-path-to-decarbonize-shipping-after-contentious-climate-talks-5982209">a two-tier pricing mechanism at the April 2025 MEPC meeting</a>. But it was a short-lived victory as growing pressure from the US and its supporters culminated in a tense MEPC meeting last October. Despite 80% approval for the NZF from member states voting in April 2025, 34 countries switched positions between April and October to favor the deferment in the face of growing pressure from the US. As a result, the IMO <a href="https://www.joc.com/article/imo-punts-on-pivotal-net-zero-shipping-regulation-6099141">was forced to delay adoption of the net-zero framework for one year</a>, until the MEPC 85 meeting planned for Nov. 30 to Dec. 4. “What we saw (at MEPC 84) was that the opposition to, and the coalition against, the net-zero framework that we saw emerge at MEPC 83 was largely unchanged,” Nyhus said. “The language was a little bit different in some cases, but the root positions were more or less what they used to be.” <h3>Binding regulatory measure </h3>While positions are entrenched, there was some progress made at MEPC 84. At the close of the meeting on May 1, countries at least confirmed that the NZF will serve as the foundation for upcoming negotiations in addition to alternate proposals that have been submitted by some countries, including Japan and Liberia. With the architecture of the NZF preserved, non-profit organization Environmental Defense Fund (EDF) said member states can now work through the concerns and priorities of all parties to develop a binding regulatory measure to reduce emissions from the sector. "Decarbonizing shipping isn't just good for the climate, it's good for business,” said Mark Brownstein, EDF’s senior vice president of energy transition. “The market is ready. Investors are ready. What's needed now is certainty and the net-zero framework is the foundation to build it on.” The IMO is now focused on building consensus around some version of the NZF this year before a reconvened MEPC meets in late November to finalize the legally binding measures. There will be two IMO intersessional working groups in the coming months, alongside a technical expert workshop on fuel supply chain traceability, that will try to address outstanding concerns and come up with detailed guidelines needed to get the framework ready for adoption at MEPC 85 in November. “We will see how that all plays out, but there is at least a willingness to keep talking, and it is important that the process keeps moving forward,” Nyhus said. “But as a consequence of this, the timeline for anything post-2026 remains unclear. ”We don’t know if we will have an approval at MEPC 85, and we don’t know what it will look like if we get it,” he added. Contact Greg Knowler at <a href="https://www.joc.com/article/no-clear-path-to-get-imos-net-zero-framework-over-the-line-industry-experts-6175174">greg.knowler@spglobal.com</a>. </div>

The pricing mechanism that is a core pillar of the International Maritime Organization’s (IMO) net-zero framework is “exceedingly unlikely” to be accepted by the US, according to maritime classification society DNV. At a meeting of the IMO’s Marine Environment Protection Committee (MEPC 84) in London in late April, Washington reiterated its opposition to the economic mechanism in the net-zero framework (NZF) that is meant to provide crucial funding for shipping’s decarbonization journey. “The fund mechanism is, in our assessment, dead in the water,” Eirik Nyhus, DNV’s vice president and director of environment, told a webcast organized by the group last week. “We see it as exceedingly unlikely that the US will accept the economic aspects of (the) net-zero framework in any form.” Achieving the IMO target of full decarbonization by or around 2050 with benchmark targets set along the way will require narrowing the wide price gap that exists between fossil fuels and the low- or zero-emission alternatives, which by its very nature will require making fossil fuels more expensive. But without the funding element, shipping groups and environmental campaigners argue that the NZF will become irrelevant. A report from the Global Maritime Forum earlier this year warned that any removal of the economic element— designed to make green technologies cheaper than high-emission alternatives — would also remove the likelihood of effective enforcement. “A standalone global fuel standard with no economic elements would likely merely replicate what already exists in the carbon intensity indicator (CII) mechanism, which requires ships with repeated non-compliance at a certain level to file a corrective action plan,” the report noted. US reiterates opposition The Trump administration made clear its opposition to the net-zero framework at a contentious MEPC 83 meeting in October last year, even threatening to leave the IMO over the issue. That anti-NZF message was reinforced by Federal Maritime Commission (FMC) Chairman Laura DiBella when she attended the most recent MEPC meeting in London two weeks ago. “The NZF is an unnecessary tax on US shippers and vessels operating in international waters,” DiBella said in a statement before attending the meeting. “The NZF would cost the maritime industry billions of dollars annually. As the largest consumer of imported goods, these costs will be directly passed onto US consumers.” The IMO’s NZF is aimed at reducing greenhouse gas (GHG) emissions from ships, in line with its 2023 GHG Strategy. It aims to set global standards for shipping’s carbon emissions and create a greenhouse gas pricing mechanism for ocean carriers to sharply reduce emissions by 2050. The NZF took a big step forward with the formal adoption of a two-tier pricing mechanism at the April 2025 MEPC meeting . But it was a short-lived victory as growing pressure from the US and its supporters culminated in a tense MEPC meeting last October. Despite 80% approval for the NZF from member states voting in April 2025, 34 countries switched positions between April and October to favor the deferment in the face of growing pressure from the US. As a result, the IMO was forced to delay adoption of the net-zero framework for one year , until the MEPC 85 meeting planned for Nov. 30 to Dec. 4. “What we saw (at MEPC 84) was that the opposition to, and the coalition against, the net-zero framework that we saw emerge at MEPC 83 was largely unchanged,” Nyhus said. “The language was a little bit different in some cases, but the root positions were more or less what they used to be.” Binding regulatory measure While positions are entrenched, there was some progress made at MEPC 84. At the close of the meeting on May 1, countries at least confirmed that the NZF will serve as the foundation for upcoming negotiations in addition to alternate proposals that have been submitted by some countries, including Japan and Liberia. With the architecture of the NZF preserved, non-profit organization Environmental Defense Fund (EDF) said member states can now work through the concerns and priorities of all parties to develop a binding regulatory measure to reduce emissions from the sector. "Decarbonizing shipping isn't just good for the climate, it's good for business,” said Mark Brownstein, EDF’s senior vice president of energy transition. “The market is ready. Investors are ready. What's needed now is certainty and the net-zero framework is the foundation to build it on.” The IMO is now focused on building consensus around some version of the NZF this year before a reconvened MEPC meets in late November to finalize the legally binding measures. There will be two IMO intersessional working groups in the coming months, alongside a technical expert workshop on fuel supply chain traceability, that will try to address outstanding concerns and come up with detailed guidelines needed to get the framework ready for adoption at MEPC 85 in November. “We will see how that all plays out, but there is at least a willingness to keep talking, and it is important that the process keeps moving forward,” Nyhus said. “But as a consequence of this, the timeline for anything post-2026 remains unclear. ”We don’t know if we will have an approval at MEPC 85, and we don’t know what it will look like if we get it,” he added. Contact Greg Knowler at greg.knowler@spglobal.com .

Transport, Trade and Regulation News

IMO carbon pricing mechanism 'dead in the water’: DNV

<div class="phx-topic abstract-wrapper">The closure of the Strait of Hormuz is the most recent example of how maritime chokepoints can be leveraged as a useful political tool, forcing global supply chains to adapt to a more complex geopolitical landscape, writes Lars Jensen.</div>

The closure of the Strait of Hormuz is the most recent example of how maritime chokepoints can be leveraged as a useful political tool, forcing global supply chains to adapt to a more complex geopolitical landscape, writes Lars Jensen.

<div class="phx-topic">Increasing geopolitical tensions are clearly leading to a weaponization of maritime chokepoints. The critical question is how much this will escalate in the coming years and how shipping in general, and container shipping in particular, is going to be impacted. First of all, what is meant by the term “weaponization” of maritime chokepoints? In essence, it is the use of maritime chokepoints as leverage for a political agenda, either for domestic or for international purposes. And the chokepoints refer to elements in the supply chain that are limited in number and/or capacity without the ability to effectively bring in new capacity or easily be bypassed. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6219508_0.1.jpg"></img></div>The obvious example playing itself out presently is the crisis <a href="https://www.joc.com/article/ongoing-hormuz-closure-could-expand-bunker-wait-times-globally-analyst-6215621">in the Strait of Hormuz</a>. Initially with Iran using it as a “weapon” against not just the US and Israel but as an attack vector at the global economy. This de-facto widens the conflict to a global scale. The US subsequently also weaponized the Strait of Hormuz in a blockade against Iranian-related shipping interests, but the scale and scope are much more limited than what Iran has done. However, both the US and Iranian blockades resulted in a reduction of available crude oil in the world market, and as such, the usage of this weapon, regardless by whom, has negative consequences on stakeholders not directly involved in the war. This is certainly not the first such weaponization of maritime chokepoints in recent times. <a href="https://www.joc.com/article/maersk-hapag-lloyd-confirm-theyll-route-gemini-service-through-suez-6163432">The Red Sea crisis</a> is yet another example of this where a relatively weak military power was able to successfully weaponize the chokepoint. Today, more than 900 days later, the Houthis effectively maintain an embargo on certain vessels and shipping lines. The US announcement of million-dollar fees on Chinese vessels calling US ports in 2025 was yet another example of weaponization of maritime chokepoints: In this case, ports and terminals and not a body of water. The <a href="https://www.joc.com/article/china-returns-fire-with-retaliatory-port-fees-targeting-us-affiliated-ships-6095198">Chinese response was a retaliation in kind</a>, with China also weaponizing the Chinese ports as chokepoints. <a href="https://www.joc.com/article/cma-cgm-levies-emergency-surcharges-on-pakistani-trade-amid-india-tensions-6001112https://www.joc.com/article/cma-cgm-levies-emergency-surcharges-on-pakistani-trade-amid-india-tensions-6001112">India weaponized their ports as well in 2025</a>. As Pakistan and India came to the brink of war, India banned the entry of vessels into their ports that had been calling Pakistani ports. Turkey made a similar move for a while in 2025, banning Israeli shipping interest from calling Turkish ports. Spain <a href="https://www.joc.com/article/fmc-weighs-hefty-fees-port-bans-for-spanish-vessels-6161465">banned vessels suspected of carrying weapons for Israel</a> from calling Spanish ports, forcing some container vessels to deviate to Tangiers in Morocco instead of calling Algeciras. Port workers in, for example, the Netherlands refused to handle Russian cargo in Dutch ports following the Russian invasion of Ukraine. These are all just recent examples of the weaponization of maritime chokepoints. With geopolitical turmoil on the rise, we should expect more of such actions to take place in the future. <h3>Panama Canal an obvious flashpoint </h3>One of the most obvious risks is the Panama Canal. It is clearly a vital maritime chokepoint, and the past year has shown <a href="https://www.joc.com/article/cosco-halts-balboa-calls-in-latest-twist-over-panama-port-row-6185309">an increase in the conflict between the US and China</a> in terms of who “controls” the canal. Obviously, in the eyes of the Panamanian government and the canal authorities, neither the US nor China controls the canal; it is instead governed by the neutrality treaty. And the Panamanian government has been a stalwart custodian of that treaty. However, if the US and China insist on making this a geopolitical issue, the influence of Panama is somewhat limited. The Northeastern Arctic sea route north of Siberia is obviously a maritime chokepoint under strong influence by Russia. Even though there is no reason to suspect presently that Egypt would weaponize the Suez Canal itself, it is still within the realm of possibility that Iran could do so given the range of its drones and missiles. The weaponization of maritime chokepoints is nothing new. We have been used to a world in the past many decades where maritime trade was largely governed by economic forces and the advance of more free trade. We are now, however, seeing a world wherein geopolitical differences once more elevate the usage of such leverage to useful political tools, and the maritime industry — and the associated global supply chains — will have to adapt to a more complex landscape. Lars Jensen is CEO and partner at Vespucci Maritime. Contact him at <a href="mailto:lars.jensen@vespucci-maritime.com">lars.jensen@vespucci-maritime.com</a>. </div>

Increasing geopolitical tensions are clearly leading to a weaponization of maritime chokepoints. The critical question is how much this will escalate in the coming years and how shipping in general, and container shipping in particular, is going to be impacted. First of all, what is meant by the term “weaponization” of maritime chokepoints? In essence, it is the use of maritime chokepoints as leverage for a political agenda, either for domestic or for international purposes. And the chokepoints refer to elements in the supply chain that are limited in number and/or capacity without the ability to effectively bring in new capacity or easily be bypassed. The obvious example playing itself out presently is the crisis in the Strait of Hormuz . Initially with Iran using it as a “weapon” against not just the US and Israel but as an attack vector at the global economy. This de-facto widens the conflict to a global scale. The US subsequently also weaponized the Strait of Hormuz in a blockade against Iranian-related shipping interests, but the scale and scope are much more limited than what Iran has done. However, both the US and Iranian blockades resulted in a reduction of available crude oil in the world market, and as such, the usage of this weapon, regardless by whom, has negative consequences on stakeholders not directly involved in the war. This is certainly not the first such weaponization of maritime chokepoints in recent times. The Red Sea crisis is yet another example of this where a relatively weak military power was able to successfully weaponize the chokepoint. Today, more than 900 days later, the Houthis effectively maintain an embargo on certain vessels and shipping lines. The US announcement of million-dollar fees on Chinese vessels calling US ports in 2025 was yet another example of weaponization of maritime chokepoints: In this case, ports and terminals and not a body of water. The Chinese response was a retaliation in kind , with China also weaponizing the Chinese ports as chokepoints. India weaponized their ports as well in 2025 . As Pakistan and India came to the brink of war, India banned the entry of vessels into their ports that had been calling Pakistani ports. Turkey made a similar move for a while in 2025, banning Israeli shipping interest from calling Turkish ports. Spain banned vessels suspected of carrying weapons for Israel from calling Spanish ports, forcing some container vessels to deviate to Tangiers in Morocco instead of calling Algeciras. Port workers in, for example, the Netherlands refused to handle Russian cargo in Dutch ports following the Russian invasion of Ukraine. These are all just recent examples of the weaponization of maritime chokepoints. With geopolitical turmoil on the rise, we should expect more of such actions to take place in the future. Panama Canal an obvious flashpoint One of the most obvious risks is the Panama Canal. It is clearly a vital maritime chokepoint, and the past year has shown an increase in the conflict between the US and China in terms of who “controls” the canal. Obviously, in the eyes of the Panamanian government and the canal authorities, neither the US nor China controls the canal; it is instead governed by the neutrality treaty. And the Panamanian government has been a stalwart custodian of that treaty. However, if the US and China insist on making this a geopolitical issue, the influence of Panama is somewhat limited. The Northeastern Arctic sea route north of Siberia is obviously a maritime chokepoint under strong influence by Russia. Even though there is no reason to suspect presently that Egypt would weaponize the Suez Canal itself, it is still within the realm of possibility that Iran could do so given the range of its drones and missiles. The weaponization of maritime chokepoints is nothing new. We have been used to a world in the past many decades where maritime trade was largely governed by economic forces and the advance of more free trade. We are now, however, seeing a world wherein geopolitical differences once more elevate the usage of such leverage to useful political tools, and the maritime industry — and the associated global supply chains — will have to adapt to a more complex landscape. Lars Jensen is CEO and partner at Vespucci Maritime. Contact him at lars.jensen@vespucci-maritime.com .

Hormuz closure just the latest ‘weaponization’ of maritime chokepoints

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