<div class="phx-topic abstract-wrapper">There is a lot of potential volume out there for intermodal to tap, if it could only solve the interchange dilemma. Instead, the sector seems to be moving in the opposite direction.</div>

There is a lot of potential volume out there for intermodal to tap, if it could only solve the interchange dilemma. Instead, the sector seems to be moving in the opposite direction.

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<div>The recent announcement of the imminent cancellation of interline service on almost 200 joint <a>Union Pacific Railroad</a>-<a>CSX Transportation</a> lanes transiting Chicago promises to scramble peak season plans for many intermodal shippers. But setting the near-term disruption aside, what does it say about the ability for intermodal to growth longer term? It will likely result in further concentration of intermodal share in a relatively smaller sliver of the total market.Gross Transportation Consulting has teamed up with Noel Perry of Transport Futures to produce what JOC believes is the first-ever measurement of intermodal market share by mileage range.<h2>Figure 1</h2>Figure 1 sets out...

The recent announcement of the imminent cancellation of interline service on almost 200 joint Union Pacific Railroad - CSX Transportation lanes transiting Chicago promises to scramble peak season plans for many intermodal shippers. But setting the near-term disruption aside, what does it say about the ability for intermodal to growth longer term? It will likely result in further concentration of intermodal share in a relatively smaller sliver of the total market. Gross Transportation Consulting has teamed up with Noel Perry of Transport Futures to produce what JOC believes is the first-ever measurement of intermodal market share by mileage range. Figure 1 Figure 1 sets out the distribution of US dry van and reefer freight by mileage range. Only freight that originates and terminates within the United States is included. The green columns show the percentages for all such truck moves, while the gray columns exclude local and short-haul truck moves of fewer than 250 miles from consideration. Of the roughly 111 million dry van and reefer heavy-duty truck moves that occurred in the United States in second-quarter 2018, more than 54 percent were short-haul moves of 250 miles or fewer. About 50 million truckloads moved 250 miles or more and therefore might be considered “intermodal eligible.” Looking at the gray bars, the mileage distribution for truck follows a very familiar and straightforward pattern. The longer the haul, the fewer trucks are moving. Indeed, only 3.6 percent of all intermodal-eligible truck moves took place in the intermodal “sweet spot” of between 2,000 and 2,500 miles. Click to enlarge The teal columns present similar data for intermodal. (These percentages are approximations that were produced by reviewing the Intermodal Association of North America ETSO US region-to-region intermodal data and assigning a mileage range to each region-pair. A further caveat is that the percentages are likely distorted by rubber-tire transfers across interchange points, which would tend to boost volume in the 750- to 1,000-mile and 2,000- to 2,500-mile segments at the expense of very long-haul “transcontinental” type moves.) The distribution of intermodal activity looks nothing like truck. It is what a statistician would call a “bimodal distribution” with peaks in the 750- to 1,000-mile and 2,000- to 2,500-mile ranges. Figure 2 Figure 2 combines these statistics to produce a rough idea of intermodal market share by length of haul. The results are striking. Overall intermodal share was about 10.1 percent of all dry van and reefer truck moves of more than 500 miles in second quarter 2018 and 6.8 percent of such moves over 250 miles. (These figures are lower than previously published numbers mainly due to the inclusion of reefer truck volume in the totals.) Intermodal share in the 2,000- to 2,500-mile range towers over all other ranges at over 42 percent. In distant second place is the share of 750- to 1,000-mile hauls at more than 12 percent. A simplistic look at intermodal economics versus truck would lead one to expect that intermodal share would rise as length of haul increases. The further one goes on low-cost rail, the better the economics versus truck. But obviously things don’t work that way in the real world. Intermodal share in the 1,000- to 2,000-mile range is lower than 750- to 1,000-mile range, even though the length of haul is longer. Intermodal’s share of ultra-long-haul moves is also much lower than that of 2,000- to 2,500-mile. Click to enlarge Interchange appears to be the issue. Take, for example, a move from California to upstate New York. Rubber-tire interchange across Chicago versus steel-wheel interchange adds two lifts (off at the western railroad’s Chicago terminal and back on at the eastern road’s Chicago facility across town) at about $50 each, plus the cost of the cross-town dray (which can run as low as $100 to as high as $300 depending on which terminals are involved). The total is somewhere in the range of $200 to $400, offset to a limited extent by the elimination of the switching move across town for the steel-wheel move. For a long-haul move of perhaps 3,000 miles, that works out to a perhaps-tolerable 6 cents to 12 cents per mile. But for a haul of 1,000 miles that happens to traverse Chicago, it means a likely prohibitive 20 to 40 cents additional per mile. For a load coming from California, once that container or trailer is grounded in Chicago, it may stay on the highway for the rest of the way. Shorter-haul moves via Chicago, such as, for example, Minneapolis-Atlanta, may truck the entire way rather than deal with the complexity of the Chicago crosstown. When intermodal appears to work best Intermodal appears to work best when only one railroad is involved and there is no interchange. Single-line hauls from the west coast to Chicago of more than 2,000 miles work great. Single-line hauls within the eastern territory also seem to work well although the competitive economics are more difficult. But the industry just doesn’t seem to cope very well with interline and the task of dividing both the required work and revenue to everyone’s satisfaction. The difficulties of blocking trains for multiple destinations in a complex intermodal network seem to defy the industry’s ability to consistently handle the issue. It’s easier to simply build a single conveyor belt that terminates in Chicago and allow the streets of the city to function as the sorting hub. How big is the foregone volume opportunity? For a quick “back-of-the-envelope” analysis, assume that instead of the current market share picture, intermodal share ramps up steadily from the existing 12.4 percent at 751-mile to 1,000-mile range to the existing 42.1 percent at 2,000-mile to 2,500-mile ranges. That would imply a share of 22 percent in the 1,000-mile to 1,500-mile range and 32 percent between 1,500 and 2,000 miles. It would mean more than 1.5 million intermodal revenue moves per quarter, an increase in overall volume of 43 percent. Obviously this is an extremely simplistic analysis that ignores a host of other considerations. But even setting that aside, the message is that there is a lot of potential volume out there for intermodal to tap if it only could solve the interchange dilemma. Instead the sector seems to be moving in the opposite direction. A coast-to-coast railroad merger wouldn't be prudent for a host of reasons. However, if there is an argument in favor of such a combination, this is it. A combined east-west entity would burst through the interchange barriers. Chicago and the other Mississippi River interchange points would become just stops on the national intermodal network rather than the impediments that they are today. In recent years when such a merger was being contemplated, the rail industry’s general posture was that a merger was not required because the railroads already knew how to work efficiently together. Based on recent actions can the industry really say that? A great deal of potential volume awaits the answer. Contact Lawrence Gross at lgross@intermodalindepth.com and follow him on Twitter @intermodalist. ** RELATED STORIES: UP-CSX interchange changes send shippers scrambling Are US railroads missing out on intermodal volume?

Trucking News

Rail News

Analysis: US intermodal interline woes threaten growth

<div class="phx-topic abstract-wrapper"> The answer to emissions-cutting challenges facing the shipping industry cannot be overlapping regional measures or conflicting systems, Soren Toft told supply chain executives gathered at the IMO. </div>

The answer to emissions-cutting challenges facing the shipping industry cannot be overlapping regional measures or conflicting systems, Soren Toft told supply chain executives gathered at the IMO.

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<div class="phx-topic">Decarbonizing shipping will require a global regulatory approach through the International Maritime Organization (IMO) and not a patchwork of overlapping regional measures, Mediterranean Shipping Co. CEO Soren Toft said Thursday. Addressing a gathering of supply chain executives at an IMO-hosted celebration in London of the World Shipping Council’s 25th anniversary, Toft — who is also chairman of the WSC — said the central role of the IMO was global and that it “works best with global rules.” ”We know there’s a challenge of decarbonization and growing pressure on supply chains,” he said. “These things need attention, and the answer to these challenges cannot be overlapping regional measures or conflicting systems.” Toft’s pointed remarks come as the IMO struggles to get its net-zero framework (NZF) adopted by member states. Regulatory uncertainty reached a head last October when the IMO decided to <a href="https://www.joc.com/article/imo-punts-on-pivotal-net-zero-shipping-regulation-6099141">postpone the adoption of its global NZF</a> for a year following robust US-led opposition to the proposed pricing and fuel intensity measures. US opposition remains unchanged, particularly with regards to the core pricing mechanism within the NZF. Washington’s anti-NZF position was reinforced <a href="https://www.joc.com/article/fmcs-dibella-brings-anti-net-zero-message-to-imo-london-meeting-6210952">two weeks ago</a> at the 84th meeting of the IMO’s Marine Environment Protection Committee (MEPC 84) in London. The pricing measure is crucial and will involve a global greenhouse gas fuel standard coupled with a penalty or contribution system that will make cleaner shipping fuels economically viable while ensuring strict enforcement. Contributions paid by ships that exceed their emissions limits would be directed into the IMO Net-Zero Fund that will be redistributed as financial rewards to vessels using low-emission fuels, offsetting the cost gap. Getting the NZF adopted at MEPC 85 this November will provide the regulatory certainty ocean carriers and fuel producers need to invest the huge sums necessary to decarbonize the shipping industry. That responsibility lies with IMO member states, Toft said in his IMO address. “We, and ultimately our clients, need predictability and consistency,” he said. “We need the help of all of you to agree on practical global measures to achieve net-zero objectives, support large scale deployment of alternative fuels, and we also need you to enforce international maritime regulations in a harmonized way.” <h3>Uncertain regulatory environment </h3>Despite uncertainties caused by the IMO’s decision to delay the adoption of its NZF, the container shipping industry has continued to invest heavily in dual-fuel vessels and bunkering infrastructure. ”We’ve taken a very meaningful step towards making the world greener in the future, (and) that is without knowing exactly what fuels and what frameworks we are navigating towards,” Toft told attendees at IMO headquarters. Of the 12.2 million TEUs of capacity currently on order, 6.4 million TEUs are for LNG dual-fuel ships and 1.7 million are dual-fuel methanol vessels, according to Sea-web, a sister company of the Journal of Commerce within S&amp;P Global. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="433a666c-6023-4455-9d17-30b982f4835b"></dynamic-object></div>In his address to the gathering, Arsenio Dominguez, the IMO’s secretary-general, acknowledged the difficult position faced by carriers in such an uncertain regulatory environment. ”In representing this part of the sector, the World Shipping Council is also moving ahead with decarbonization, taking forward the orders of vessels that are tentatively fuel-ready,” he said. “I can't give you the answer (on what fuels to choose)...we decided to be agnostic in that respect,” Dominguez added. “But I'm sure that with the feedback we continue to receive from you, it will allow us to not only progress our regulatory process, but to improve the quality of our regulations. And trust me, if there's one area of work that we will continue to work on, it's the harmonized implementation of IMO rules.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Decarbonizing shipping will require a global regulatory approach through the International Maritime Organization (IMO) and not a patchwork of overlapping regional measures, Mediterranean Shipping Co. CEO Soren Toft said Thursday. Addressing a gathering of supply chain executives at an IMO-hosted celebration in London of the World Shipping Council’s 25th anniversary, Toft — who is also chairman of the WSC — said the central role of the IMO was global and that it “works best with global rules.” ”We know there’s a challenge of decarbonization and growing pressure on supply chains,” he said. “These things need attention, and the answer to these challenges cannot be overlapping regional measures or conflicting systems.” Toft’s pointed remarks come as the IMO struggles to get its net-zero framework (NZF) adopted by member states. Regulatory uncertainty reached a head last October when the IMO decided to postpone the adoption of its global NZF for a year following robust US-led opposition to the proposed pricing and fuel intensity measures. US opposition remains unchanged, particularly with regards to the core pricing mechanism within the NZF. Washington’s anti-NZF position was reinforced two weeks ago at the 84th meeting of the IMO’s Marine Environment Protection Committee (MEPC 84) in London. The pricing measure is crucial and will involve a global greenhouse gas fuel standard coupled with a penalty or contribution system that will make cleaner shipping fuels economically viable while ensuring strict enforcement. Contributions paid by ships that exceed their emissions limits would be directed into the IMO Net-Zero Fund that will be redistributed as financial rewards to vessels using low-emission fuels, offsetting the cost gap. Getting the NZF adopted at MEPC 85 this November will provide the regulatory certainty ocean carriers and fuel producers need to invest the huge sums necessary to decarbonize the shipping industry. That responsibility lies with IMO member states, Toft said in his IMO address. “We, and ultimately our clients, need predictability and consistency,” he said. “We need the help of all of you to agree on practical global measures to achieve net-zero objectives, support large scale deployment of alternative fuels, and we also need you to enforce international maritime regulations in a harmonized way.” Uncertain regulatory environment Despite uncertainties caused by the IMO’s decision to delay the adoption of its NZF, the container shipping industry has continued to invest heavily in dual-fuel vessels and bunkering infrastructure. ”We’ve taken a very meaningful step towards making the world greener in the future, (and) that is without knowing exactly what fuels and what frameworks we are navigating towards,” Toft told attendees at IMO headquarters. Of the 12.2 million TEUs of capacity currently on order, 6.4 million TEUs are for LNG dual-fuel ships and 1.7 million are dual-fuel methanol vessels, according to Sea-web, a sister company of the Journal of Commerce within S&P Global. In his address to the gathering, Arsenio Dominguez, the IMO’s secretary-general, acknowledged the difficult position faced by carriers in such an uncertain regulatory environment. ”In representing this part of the sector, the World Shipping Council is also moving ahead with decarbonization, taking forward the orders of vessels that are tentatively fuel-ready,” he said. “I can't give you the answer (on what fuels to choose)...we decided to be agnostic in that respect,” Dominguez added. “But I'm sure that with the feedback we continue to receive from you, it will allow us to not only progress our regulatory process, but to improve the quality of our regulations. And trust me, if there's one area of work that we will continue to work on, it's the harmonized implementation of IMO rules.” Contact Greg Knowler at greg.knowler@spglobal.com .

Transport, Trade and Regulation News

Container Shipping News

Maritime

Shipping decarbonization will work best with global rules: MSC CEO

<div class="phx-topic abstract-wrapper">The National Shipper Advisory Committee, which guides the maritime regulator on ocean freight issues, meets once a year to drive policy decisions.</div>

The National Shipper Advisory Committee, which guides the maritime regulator on ocean freight issues, meets once a year to drive policy decisions.

<div class="phx-topic">The US Federal Maritime Commission (FMC) on Thursday said it is searching for new members to serve on its National Shipper Advisory Committee (NSAC), which advises the federal agency on policy related to ocean freight. The advisory committee, composed of 24 individuals representing import and export cargo interests, specifically counsels the FMC on issues of supply chain competitiveness, reliability, integrity, and fairness. The committee is evenly split between import and export entities. “The commission intends for membership to reflect a balanced mix of shippers, and selections will be made based on factors such as commodities shipped, ports used, geographic areas served, and origins of cargo, as well as other relevant factors,” the FMC said in a statement. The agency added it was “looking for applicants with extensive shipping and US oceanic supply chain knowledge, as well as an eagerness to collaborate and share their expertise on various issues...” The NSAC, originally formed in 2021, has provided guidance on an array of issues, from <a href="https://www.joc.com/article/bentzel-wants-partial-fmc-oversight-over-rail-demurrage-5243057">rail demurrage</a> and a <a href="https://www.joc.com/article/us-draft-legislation-seeks-to-update-osra-22-boost-china-scrutiny-5220516">rewrite of the Ocean Shipping Reform Act</a> (OSRA) during the pandemic, to more recent efforts, including <a href="https://www.joc.com/article/fmc-rules-for-truckers-in-chassis-dispute-with-ocean-carriers-5234355">chassis disputes</a> with ocean carriers and a push for a “<a href="https://www.joc.com/article/shipper-bill-of-rights-takes-aim-at-ocean-carrier-accountability-transparency-5958197">shipper’s bill of rights</a>.” Some NASC members have privately expressed concerns that the FMC wasn’t sure how to handle its recommendations, partly due to the committee being the first of its kind to report to the agency. <a href="https://www.federalregister.gov/documents/2026/05/14/2026-09667/solicitation-for-applications-to-serve-as-members-on-the-national-shipper-advisory-committee">NSAC members serve three-year terms</a>, with the committee meeting at least once a year, although more frequent meetings can potentially be convened by the FMC or a majority of committee members. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

The US Federal Maritime Commission (FMC) on Thursday said it is searching for new members to serve on its National Shipper Advisory Committee (NSAC), which advises the federal agency on policy related to ocean freight. The advisory committee, composed of 24 individuals representing import and export cargo interests, specifically counsels the FMC on issues of supply chain competitiveness, reliability, integrity, and fairness. The committee is evenly split between import and export entities. “The commission intends for membership to reflect a balanced mix of shippers, and selections will be made based on factors such as commodities shipped, ports used, geographic areas served, and origins of cargo, as well as other relevant factors,” the FMC said in a statement. The agency added it was “looking for applicants with extensive shipping and US oceanic supply chain knowledge, as well as an eagerness to collaborate and share their expertise on various issues...” The NSAC, originally formed in 2021, has provided guidance on an array of issues, from rail demurrage and a rewrite of the Ocean Shipping Reform Act (OSRA) during the pandemic, to more recent efforts, including chassis disputes with ocean carriers and a push for a “ shipper’s bill of rights .” Some NASC members have privately expressed concerns that the FMC wasn’t sure how to handle its recommendations, partly due to the committee being the first of its kind to report to the agency. NSAC members serve three-year terms , with the committee meeting at least once a year, although more frequent meetings can potentially be convened by the FMC or a majority of committee members. Contact Eric Johnson at eric.johnson@spglobal.com .

FMC searching for new members to serve on shipper advisory board

<div class="phx-topic abstract-wrapper">The producer price indexes for truckload and LTL transportation in the US both leapt about 20% year over year in April, revealing growing pressure on supply chains.</div>

The producer price indexes for truckload and LTL transportation in the US both leapt about 20% year over year in April, revealing growing pressure on supply chains.

<div class="phx-topic">The US producer price indexes (PPIs) for trucking last month leapt in nearly vertical lines so steep they could cause vertigo. The long-distance truckload PPI jumped 11.4% in April from March, reaching 202.2, according to data released by the US Bureau of Labor Statistics (BLS) Wednesday. That’s an 18.9% year-over-year increase for the all-inclusive measure of truckload pricing. April’s less-than-truckload (LTL) PPI shot up 12% from March and climbed 20% year over year to a record-breaking 311 — the biggest annualized increase in the LTL index since June 2022. In comparison, the April PPI for intermodal freight rail transportation was flat from March and only up less than 1 percentage point year over year, BLS data showed. The trucking PPIs represent final “selling prices” paid by thousands of shippers, including fuel surcharges and spot and contract base rates. The April PPIs show the impact of war-driven diesel prices in the US that have been more than 50% higher year over year since March 23. The average US retail diesel as of May 11 was $5.64 per gallon, flat with the previous week but up 62.2% from a year ago, according to the US Energy Information Administration (EIA). The US average diesel price has been above $5 per gallon for nine weeks. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="dd129e5b-5d7d-4cc2-a3fe-d9f34fdebe58"></dynamic-object></div>The PPIs for truckload and LTL services rose even quicker than aggregate US producer prices, which were up 1.4% from March in April and up 6% year over year, according to the BLS. The April increase is the largest advance for the PPI since a 1.7% leap in March 2022. The consumer price index (CPI), a measure of inflation, rose 3.8% year over year in April. Subtracting food and energy costs, the CPI rose 2.8% year over year. The PPIs are likely to stay elevated, buoyed by fuel prices, in particular the cost of diesel, which is used across freight transportation modes. Higher energy costs are inflating cost pressures throughout supply chains. The New York Federal Reserve Bank’s <a href="https://www.newyorkfed.org/research/policy/gscpi#/interactive">Global Supply Chain Pressure Index</a> (GSCPI) rose from 0.68 in March to 1.82 in April, a leap that closely matches the trajectory of the trucking PPIs. <h3>‘Surcharges on everything’ </h3>Shippers are seeing the immediate impact of the diesel price spike in higher fuel surcharges from their transportation and logistics providers. “As soon as we have to haul anything anywhere, there’s fuel surcharges on everything,” Amardeip Singh Doman, CEO of Doman Building Materials Group, said in a quarterly earnings call Monday. “We’re doing the best we can to navigate through that.” Doman, which distributes lumber and other building products throughout the US, is trying to pass the higher cost of surcharges through to customers, where possible, he said, noting: “We’re just trying to break even if we can on it and push it through.” Shippers are <a href="https://www.joc.com/article/rising-fuel-costs-forcing-us-truck-shippers-to-shift-freight-6214133">struggling to respond</a> to rapid price increases, said Jenny Vander Zandem, COO of transportation and fuel management company Breakthrough. “They don’t have many levers they can pull” to quickly mitigate higher costs, she said in an interview. And that’s forcing shippers to consider the prospect of higher fuel costs long term. “Forecasts have moved from something we would do annually to quarterly, monthly and now even more frequently with clients,” said Vander Zandem. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="4f41d0db-fdca-4d0e-841e-6a45e944cc38"></dynamic-object></div>Whether the Strait of Hormuz is reopened or not, high diesel prices will linger, Matt Muenster, chief economist at Breakthrough, told the Journal of Commerce. From ports to inland truck stops, “this is a low sulfur fuel conundrum,” Muenster said. “There’s a structural challenge at work here because refiners can’t just increase production for these particular fuels.” US production, he said, is geared toward gasoline. US diesel inventories are down 11% from their five-year average, Muenster said, as the US continues to export diesel. “We’re going to have more stress in the diesel market in autumn when agriculture and transportation put more heat under the diesel barrel,” he said. “Summer usually offers time for diesel inventories to build, but if they continue to draw it will add pressure.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. </div>

The US producer price indexes (PPIs) for trucking last month leapt in nearly vertical lines so steep they could cause vertigo. The long-distance truckload PPI jumped 11.4% in April from March, reaching 202.2, according to data released by the US Bureau of Labor Statistics (BLS) Wednesday. That’s an 18.9% year-over-year increase for the all-inclusive measure of truckload pricing. April’s less-than-truckload (LTL) PPI shot up 12% from March and climbed 20% year over year to a record-breaking 311 — the biggest annualized increase in the LTL index since June 2022. In comparison, the April PPI for intermodal freight rail transportation was flat from March and only up less than 1 percentage point year over year, BLS data showed. The trucking PPIs represent final “selling prices” paid by thousands of shippers, including fuel surcharges and spot and contract base rates. The April PPIs show the impact of war-driven diesel prices in the US that have been more than 50% higher year over year since March 23. The average US retail diesel as of May 11 was $5.64 per gallon, flat with the previous week but up 62.2% from a year ago, according to the US Energy Information Administration (EIA). The US average diesel price has been above $5 per gallon for nine weeks. The PPIs for truckload and LTL services rose even quicker than aggregate US producer prices, which were up 1.4% from March in April and up 6% year over year, according to the BLS. The April increase is the largest advance for the PPI since a 1.7% leap in March 2022. The consumer price index (CPI), a measure of inflation, rose 3.8% year over year in April. Subtracting food and energy costs, the CPI rose 2.8% year over year. The PPIs are likely to stay elevated, buoyed by fuel prices, in particular the cost of diesel, which is used across freight transportation modes. Higher energy costs are inflating cost pressures throughout supply chains. The New York Federal Reserve Bank’s Global Supply Chain Pressure Index (GSCPI) rose from 0.68 in March to 1.82 in April, a leap that closely matches the trajectory of the trucking PPIs. ‘Surcharges on everything’ Shippers are seeing the immediate impact of the diesel price spike in higher fuel surcharges from their transportation and logistics providers. “As soon as we have to haul anything anywhere, there’s fuel surcharges on everything,” Amardeip Singh Doman, CEO of Doman Building Materials Group, said in a quarterly earnings call Monday. “We’re doing the best we can to navigate through that.” Doman, which distributes lumber and other building products throughout the US, is trying to pass the higher cost of surcharges through to customers, where possible, he said, noting: “We’re just trying to break even if we can on it and push it through.” Shippers are struggling to respond to rapid price increases, said Jenny Vander Zandem, COO of transportation and fuel management company Breakthrough. “They don’t have many levers they can pull” to quickly mitigate higher costs, she said in an interview. And that’s forcing shippers to consider the prospect of higher fuel costs long term. “Forecasts have moved from something we would do annually to quarterly, monthly and now even more frequently with clients,” said Vander Zandem. Whether the Strait of Hormuz is reopened or not, high diesel prices will linger, Matt Muenster, chief economist at Breakthrough, told the Journal of Commerce. From ports to inland truck stops, “this is a low sulfur fuel conundrum,” Muenster said. “There’s a structural challenge at work here because refiners can’t just increase production for these particular fuels.” US production, he said, is geared toward gasoline. US diesel inventories are down 11% from their five-year average, Muenster said, as the US continues to export diesel. “We’re going to have more stress in the diesel market in autumn when agriculture and transportation put more heat under the diesel barrel,” he said. “Summer usually offers time for diesel inventories to build, but if they continue to draw it will add pressure.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

Truckload

Surface

War-driven fuel prices send trucking PPIs, shipper costs skyward

<div class="phx-topic abstract-wrapper">The unanimous ruling in a case involving C.H. Robinson adds a new layer of responsibility for brokers to consider the safety history of the motor carriers they hire to haul loads.</div>

The unanimous ruling in a case involving C.H. Robinson adds a new layer of responsibility for brokers to consider the safety history of the motor carriers they hire to haul loads.

<div class="phx-topic">Federal law does not automatically shield freight brokers from lawsuits alleging they hired unsafe carriers involved in accidents, the US Supreme Court ruled Thursday, a decision likely to reshape how shippers and third-party logistics providers assess carrier risk. The unanimous decision in Montgomery v. Caribe Transport II does not make brokers liable every time a truck crashes. But it removes a major legal shield the brokerage industry has relied on for years. The case involved a December 2017 crash in Illinois involving a Caribe Transport II truck that struck a vehicle parked on the side of the road. The accident injured Shawn Montgomery, who was forced to have one of his legs amputated. C.H. Robinson brokered the freight to Caribe. Robinson argued that brokers arrange transportation but do not own trucks, maintain equipment, hire drivers, or operate vehicles. Because selecting a carrier is a brokerage service, the company argued that negligent hiring claims against brokers should be preempted by federal law. But Justice Amy Coney Barrett, writing for the court, rejected that argument, allowing Montgomery’s lawsuit against Caribe and Robinson to proceed. “Montgomery’s negligent hiring claim thus falls within the FAAAA’s [Federal Aviation Administration Authorization Act’s] safety exception, which saves it from preemption,” Barrett wrote. “The safety exception saves only a subset of preempted claims: those involving regulations concerning motor vehicle safety. State laws related to motor carrier prices, routes, and services that have no relationship to safety remain preempted [by federal law].” The case is centered on the FAAAA, a federal law that broadly preempts state regulation of freight rates, routes and services. The question before the court was whether that preemption also blocks state law negligent hiring claims against brokers, or whether those claims survive under the law’s safety exception. Montgomery sued C.H. Robinson, claiming the broker negligently hired Caribe, which had a “conditional” safety rating from the Federal Motor Carrier Safety Administration (FMCSA) and several violations involving driver qualification, hours of service, vehicle maintenance, and crash rates. Lower courts sided with Robinson, stating that FAAAA blocked the claim because the law preempts state rules related to freight rates, routes and services. But the Supreme Court ruling Thursday reversed that, deciding that a broker does not have to own, drive, or repair trucks for its carrier-selection decision to involve highway safety. “Requiring C.H. Robinson to exercise ordinary care in selecting a carrier therefore ‘concerns’ motor vehicles — most obviously, the trucks that will transport the goods,” Barrett wrote. “So, Montgomery’s negligent-hiring claim falls within the FAAAA’s safety exception.” C.H. Robinson said it was “disappointed with the outcome [but] respects the court’s ruling.” “While we are disappointed in the court’s decision, we will continue to operate responsibly, support stronger federal enforcement, and work constructively with regulators, carriers, and customers to strengthen the national safety system and support safe, reliable transportation across the country,” the company said in a statement. The Transportation Intermediaries Association (TIA) said it was “deeply disappointed with the decision.” “...The law and legal precedent for decades has given the federal government, not states, the responsibility for setting safety standards for motor carriers,” TIA said in a statement. “To date, carriers, not brokers, have been responsible for complying with these standards.” <h3>Brokers can’t fall back on FMCSA registration </h3>Justices Brett Kavanaugh and Samuel Alito said the case was a close one, but they concurred with the unanimous opinion. Kavanaugh and Alito pointed out that motor carriers are already open to lawsuits for injuries on a state level, and rejected the idea that FMCSA registration alone ends the safety conversation for brokers. “Given that Congress in the FAA Authorization Act sought economic deregulation — not safety deregulation — it is hard to read the statute as written and conclude that Congress subtly sliced and diced state tort law so that trucking companies would be subject to state tort suits for accidents, but brokers would operate free of any such tort liability,” they wrote. The ruling does not impose a new checklist or instruct brokers on how to vet carriers. But it enforces an important standard of reasonable care when deciding whether a broker was negligent in hiring. For a small carrier with clean authority and no visible problems, reasonable care may be simple. For a carrier with a conditional safety rating, a poor crash record, or repeated serious violations, reasonable care may now mean more than what the brokerage industry has historically been accustomed to. Contact Ari Ashe at <a href="mailto:Ari.Ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

Federal law does not automatically shield freight brokers from lawsuits alleging they hired unsafe carriers involved in accidents, the US Supreme Court ruled Thursday, a decision likely to reshape how shippers and third-party logistics providers assess carrier risk. The unanimous decision in Montgomery v. Caribe Transport II does not make brokers liable every time a truck crashes. But it removes a major legal shield the brokerage industry has relied on for years. The case involved a December 2017 crash in Illinois involving a Caribe Transport II truck that struck a vehicle parked on the side of the road. The accident injured Shawn Montgomery, who was forced to have one of his legs amputated. C.H. Robinson brokered the freight to Caribe. Robinson argued that brokers arrange transportation but do not own trucks, maintain equipment, hire drivers, or operate vehicles. Because selecting a carrier is a brokerage service, the company argued that negligent hiring claims against brokers should be preempted by federal law. But Justice Amy Coney Barrett, writing for the court, rejected that argument, allowing Montgomery’s lawsuit against Caribe and Robinson to proceed. “Montgomery’s negligent hiring claim thus falls within the FAAAA’s [Federal Aviation Administration Authorization Act’s] safety exception, which saves it from preemption,” Barrett wrote. “The safety exception saves only a subset of preempted claims: those involving regulations concerning motor vehicle safety. State laws related to motor carrier prices, routes, and services that have no relationship to safety remain preempted [by federal law].” The case is centered on the FAAAA, a federal law that broadly preempts state regulation of freight rates, routes and services. The question before the court was whether that preemption also blocks state law negligent hiring claims against brokers, or whether those claims survive under the law’s safety exception. Montgomery sued C.H. Robinson, claiming the broker negligently hired Caribe, which had a “conditional” safety rating from the Federal Motor Carrier Safety Administration (FMCSA) and several violations involving driver qualification, hours of service, vehicle maintenance, and crash rates. Lower courts sided with Robinson, stating that FAAAA blocked the claim because the law preempts state rules related to freight rates, routes and services. But the Supreme Court ruling Thursday reversed that, deciding that a broker does not have to own, drive, or repair trucks for its carrier-selection decision to involve highway safety. “Requiring C.H. Robinson to exercise ordinary care in selecting a carrier therefore ‘concerns’ motor vehicles — most obviously, the trucks that will transport the goods,” Barrett wrote. “So, Montgomery’s negligent-hiring claim falls within the FAAAA’s safety exception.” C.H. Robinson said it was “disappointed with the outcome [but] respects the court’s ruling.” “While we are disappointed in the court’s decision, we will continue to operate responsibly, support stronger federal enforcement, and work constructively with regulators, carriers, and customers to strengthen the national safety system and support safe, reliable transportation across the country,” the company said in a statement. The Transportation Intermediaries Association (TIA) said it was “deeply disappointed with the decision.” “...The law and legal precedent for decades has given the federal government, not states, the responsibility for setting safety standards for motor carriers,” TIA said in a statement. “To date, carriers, not brokers, have been responsible for complying with these standards.” Brokers can’t fall back on FMCSA registration Justices Brett Kavanaugh and Samuel Alito said the case was a close one, but they concurred with the unanimous opinion. Kavanaugh and Alito pointed out that motor carriers are already open to lawsuits for injuries on a state level, and rejected the idea that FMCSA registration alone ends the safety conversation for brokers. “Given that Congress in the FAA Authorization Act sought economic deregulation — not safety deregulation — it is hard to read the statute as written and conclude that Congress subtly sliced and diced state tort law so that trucking companies would be subject to state tort suits for accidents, but brokers would operate free of any such tort liability,” they wrote. The ruling does not impose a new checklist or instruct brokers on how to vet carriers. But it enforces an important standard of reasonable care when deciding whether a broker was negligent in hiring. For a small carrier with clean authority and no visible problems, reasonable care may be simple. For a carrier with a conditional safety rating, a poor crash record, or repeated serious violations, reasonable care may now mean more than what the brokerage industry has historically been accustomed to. Contact Ari Ashe at ari.ashe@spglobal.com .

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Trucking labor

Supreme Court ruling strips broker protection linked to carrier safety

<div class="phx-topic abstract-wrapper">Terminal operators and port authorities must transition from their historic, passive roles as infrastructure caretakers into active orchestrators of integrated logistics ecosystems, writes Robbert van Trooijen.</div>

Terminal operators and port authorities must transition from their historic, passive roles as infrastructure caretakers into active orchestrators of integrated logistics ecosystems, writes Robbert van Trooijen.

<div class="phx-topic">In my <a href="https://www.joc.com/article/landside-infrastructure-is-container-shippings-next-great-chokepoint-6209457">most recent piece for the Journal of Commerce</a>, I argued that the real battle for supply chains has shifted inland. Building larger vessels or rushing mega-alliances into service will not solve systemic disruptions if vessels can’t find a berth. So, naturally, many players in the ports and terminals sector place great emphasis on engineering inside the gate. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6220550_0.1.jpg"></img></div>Whether investing in a greenfield project or expanding a brownfield footprint, port authorities and gateway terminal operators tend to focus most of their attention on the infrastructure and hardware within the gate, such as the draft alongside, the length of the quayside, the deployment of super post-Panamax gantry cranes, the projected yard density, and straddle carrier fleets. After all, these are the things that matter to the primary customers, the ocean carriers. However, even with electrification and automation, hardware tends to be less of a differentiator these days. Most modern terminals have deep draft, 25 to 30 gross moves per hour, efficient quayside operations, and some degree of automation. So where does it go wrong? We all know the infamous “white elephants”: state-of-the-art terminals built to world-class specifications that ultimately failed to achieve a decent return on investment. Although it may come across as an oversimplification, I would argue that one of the reasons for waning loyalty or suboptimal results, particularly for competing gateway terminals serving the same catchment area, is that the operators treated the long-term loyalty of the shipper or consignee as an afterthought. Back in 2007, I witnessed Thomas W. Malnight, then a leading professor of strategy and general management at IMD business school, teach a master class where he challenged the maritime community with a radical strategic shift. Malnight advocated that port ecosystems must look past their immediate ocean carrier clients and focus more on “the customer’s customer” — the shipper or consignee. He taught us that the ultimate metric of a gateway terminal’s value is how effectively it can convince the cargo owner to remain anchored to that specific ecosystem over a decade. The rationale is surprisingly simple: Once a large enough number of beneficial cargo owners (BCOs) are loyal to a port ecosystem, the ocean carriers will follow suit, and the tables have turned. To achieve this, terminal operators and port authorities must transition from their historic, passive roles as infrastructure caretakers into active orchestrators of integrated logistics ecosystems. This pivot requires moving beyond the traditional port gate to discover what end-users genuinely require to secure long-term cargo commitments. <h3>Shippers’ needs transcend infrastructure </h3>When we ask BCOs what they need, the answers transcend fundamental maritime infrastructure. Shippers do not build supply chain resilience around the number of container cranes on a dock. They demand reliable, seamless multimodal connections, including hinterland rail access and barge routes. They seek competitive trade environments such as specialized free zone setups equipped with bonded warehouses, cross-docking hubs, cold chain infrastructure, [potentially] air-sea setups for high-value goods, and access to an affordable and strategically located hinterland optimized for potential assembly plants. Constructing this caliber of landside ecosystem is difficult to achieve for a port authority acting in isolation. But with a clear master plan that includes collaboration among provincial, state and municipal public bodies; private investors; and diverse logistics service providers, the foundation is there for long-term success. Robbert van Trooijen, founder of Inception Partners and a McKinsey Senior Advisor, had a 33-year tenure with The Nedlloyd Group, P&amp;O Nedlloyd and the Maersk Group. Contact him at <a href="mailto:robbert@inceptionpartners.org">robbert@inceptionpartners.org</a>. </div>

In my most recent piece for the Journal of Commerce, I argued that the real battle for supply chains has shifted inland. Building larger vessels or rushing mega-alliances into service will not solve systemic disruptions if vessels can’t find a berth. So, naturally, many players in the ports and terminals sector place great emphasis on engineering inside the gate. Whether investing in a greenfield project or expanding a brownfield footprint, port authorities and gateway terminal operators tend to focus most of their attention on the infrastructure and hardware within the gate, such as the draft alongside, the length of the quayside, the deployment of super post-Panamax gantry cranes, the projected yard density, and straddle carrier fleets. After all, these are the things that matter to the primary customers, the ocean carriers. However, even with electrification and automation, hardware tends to be less of a differentiator these days. Most modern terminals have deep draft, 25 to 30 gross moves per hour, efficient quayside operations, and some degree of automation. So where does it go wrong? We all know the infamous “white elephants”: state-of-the-art terminals built to world-class specifications that ultimately failed to achieve a decent return on investment. Although it may come across as an oversimplification, I would argue that one of the reasons for waning loyalty or suboptimal results, particularly for competing gateway terminals serving the same catchment area, is that the operators treated the long-term loyalty of the shipper or consignee as an afterthought. Back in 2007, I witnessed Thomas W. Malnight, then a leading professor of strategy and general management at IMD business school, teach a master class where he challenged the maritime community with a radical strategic shift. Malnight advocated that port ecosystems must look past their immediate ocean carrier clients and focus more on “the customer’s customer” — the shipper or consignee. He taught us that the ultimate metric of a gateway terminal’s value is how effectively it can convince the cargo owner to remain anchored to that specific ecosystem over a decade. The rationale is surprisingly simple: Once a large enough number of beneficial cargo owners (BCOs) are loyal to a port ecosystem, the ocean carriers will follow suit, and the tables have turned. To achieve this, terminal operators and port authorities must transition from their historic, passive roles as infrastructure caretakers into active orchestrators of integrated logistics ecosystems. This pivot requires moving beyond the traditional port gate to discover what end-users genuinely require to secure long-term cargo commitments. Shippers’ needs transcend infrastructure When we ask BCOs what they need, the answers transcend fundamental maritime infrastructure. Shippers do not build supply chain resilience around the number of container cranes on a dock. They demand reliable, seamless multimodal connections, including hinterland rail access and barge routes. They seek competitive trade environments such as specialized free zone setups equipped with bonded warehouses, cross-docking hubs, cold chain infrastructure, [potentially] air-sea setups for high-value goods, and access to an affordable and strategically located hinterland optimized for potential assembly plants. Constructing this caliber of landside ecosystem is difficult to achieve for a port authority acting in isolation. But with a clear master plan that includes collaboration among provincial, state and municipal public bodies; private investors; and diverse logistics service providers, the foundation is there for long-term success. Robbert van Trooijen, founder of Inception Partners and a McKinsey Senior Advisor, had a 33-year tenure with The Nedlloyd Group, P&O Nedlloyd and the Maersk Group. Contact him at robbert@inceptionpartners.org .

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Marine terminals

Beyond the terminal gate: Why the future lies in logistical ecosystems

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