<div class="phx-topic abstract-wrapper">Shippers in Bangladesh are preparing for delays and higher costs after the Chittagong Port Authority implemented a precautionary measure related to the coronavirus that will keep vessels coming from China idling offshore for at least a week.</div>

Shippers in Bangladesh are preparing for delays and higher costs after the Chittagong Port Authority implemented a precautionary measure related to the coronavirus that will keep vessels coming from China idling offshore for at least a week.

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<div>Vessels coming directly from China will need to wait offshore for at least an extra week before being allowed to berth at Bangladesh’s Port of Chittagong due to precautions over the coronavirus, the port authority announced Thursday.It typically takes a ship seven to eight days to reach Chittagong after departing China. But Bangladeshi authorities want vessels to spend at least two weeks on the water after leaving China so there’s ample time to determine whether anyone onboard is infected with the coronavirus.That means vessels will need to idle for at least an additional week offshore Chittagong before receiving permission to...

Vessels coming directly from China will need to wait offshore for at least an extra week before being allowed to berth at Bangladesh’s Port of Chittagong due to precautions over the coronavirus, the port authority announced Thursday. It typically takes a ship seven to eight days to reach Chittagong after departing China. But Bangladeshi authorities want vessels to spend at least two weeks on the water after leaving China so there’s ample time to determine whether anyone onboard is infected with the coronavirus. That means vessels will need to idle for at least an additional week offshore Chittagong before receiving permission to dock. Chittagong Port Authority spokesperson Omar Faruk said the port needs to follow all international rules in relation to the virus. “We will keep the vessels coming from China or carrying Chinese crews at least 14 days on the water,” Faruk said. Shippers warn of delays, higher costs Shippers say the move will delay their receipt of the raw materials needed for manufacturing goods and worry that demurrage costs will now come into play. “If now vessels need to stay additional days at bay for coronavirus prevention, shippers will have to count demurrage,” said Ahsanul Haque Chowdhury, chairman of Chittagong’s ship agents association. Electronic goods importer Alamgir Hossain fears a big financial loss due to expected delays in receiving imported items from China. “Already the [Lunar New Year] holiday extension in China caused many shipment delays,” he told JOC.com. “If further delays are caused in Chittagong waters, the loss will be severe.” The price of many products sourced from China have already increased in the Bangladesh market ahead of the expected supply chain disruption, Hossain added. China is the largest sourcing partner for Bangladesh, both for intermediary and finished goods. Bangladesh imports goods worth $15 billion from China each year and exports just $1 billion worth of goods; virtually all the materials and goods move through Chittagong.

International ports

Chittagong delays berthing of Chinese vessels as coronavirus precaution

<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.

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<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 .

Maritime

Hormuz closure just the latest ‘weaponization’ of maritime chokepoints

<div class="phx-topic abstract-wrapper">With demand on the corridor continuing to outstrip available capacity constrained by the Middle East war, any resumption of hostilities would keep upward pressure on rates. </div>

With demand on the corridor continuing to outstrip available capacity constrained by the Middle East war, any resumption of hostilities would keep upward pressure on rates.

<div class="phx-topic">Peace talks between the US and Iran deteriorated this week, keeping air freight rates elevated and potentially stalling a recovery of flight operations into Persian Gulf airports that before the war handled a third of Asia-Europe air cargo traffic. Spot rates from China to Europe hit $5.76 per kilogram in the first week of May, the highest this year, before easing slightly to $5.42/kg on May 11, according to the Baltic Air Index (BAI). Airport hubs in the United Arab Emirates and Qatar steadily scaled up flight frequencies since the US and Iran agreed to a ceasefire in April, with Dubai-based Emirates announcing last week that 96% of its global network has now been restored. But in a May market report, BAI said a resumption of attacks would pause the recovery. With demand for air cargo on the Asia-Europe corridor continuing to outstrip available capacity constrained by the war, an escalation of hostilities would also keep upward pressure on rates. “Air space across parts of the Gulf remains restricted or closed ... the biggest impact is being felt by Asia-Europe traffic,” BAI said. “In a system with little spare capacity, even modest disruptions now move rates quickly. Even when aircraft are available, longer flight times and operational instability reduce how much cargo they can carry. The result is simple: There is less usable capacity in the system.” The Freightos Air Index also reflected a strengthening of rates. Spot rates from China to Europe on May 10 were up 57% since late February at $5.16/kg, almost 50% higher year over year. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="1f8878b6-9e77-46fc-bdf5-c1982da8007e"></dynamic-object></div>Air freight analyst Rotate said in a first quarter report that over the last 26 months, air cargo demand grew 10% against 6% capacity growth, noting that “the gap was adding pressure across the market even before the conflict in the Middle East exacerbated matters.” An estimated 30% of Asia-Europe traffic was routed via the Middle East before the war began on Feb. 28. More than 520,000 tons of international cargo capacity was lost in the first two weeks of March when air space across the Persian Gulf was closed, according to Rotate. Air freight capacity is now back to about 30% of pre-war levels. <h3>No sudden demand spike </h3>While cargo fills aircraft out of Asia, forwarders note that it is more a reflection of the disruption to the Asia-Europe network rather than a sudden demand spike. “Air freight demand continues to grow, but not at a super high pace for now and is following GDP expectations of plus 3%,” Frank Sobotka, CEO for air and sea at DSV, told analysts Tuesday at the forwarder’s capital markets day. “The drivers are predominantly high-tech cloud computing and still e-commerce from Asia that has shifted from the trans-Pacific corridor following the end of de minimis in the US into the European markets,” he said. DSV reported a 55% increase in first-quarter air cargo volume, boosted by the integration of DB Schenker traffic. But compared with the fourth quarter of 2025, seasonality and capacity constraints in the Middle East dragged sequential quarterly volume down 12%. The Denmark-based forwarder is optimistic about volume growth in the second quarter that it believes will be generated by the summer tender season and further integration of Schenker business. Kuehne + Nagel reported flat volume growth in the first quarter, a slowdown from the 7% growth seen in the last quarter of 2025. The forwarder attributed the slowdown to reduced demand for perishables and e-commerce volumes carried by its Apex subsidiary in Asia, but expects volume in air freight to be “slightly up” in the second quarter compared with the previous year. One air freight operator seeing robust demand is Maersk Air Cargo. Its air freight volume increased 20% in the first quarter compared with the same period last year, which CEO Vincent Clerc attributed to “operational improvements, enhanced productivity and more effective revenue management.” Clerc told analysts during an earnings call last week he is confident the carrier will continue to grow air cargo volume. He also said that air freight, together with ground freight and contract logistics, “will remain a key area for further productivity improvements and profitability gains throughout the year.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Peace talks between the US and Iran deteriorated this week, keeping air freight rates elevated and potentially stalling a recovery of flight operations into Persian Gulf airports that before the war handled a third of Asia-Europe air cargo traffic. Spot rates from China to Europe hit $5.76 per kilogram in the first week of May, the highest this year, before easing slightly to $5.42/kg on May 11, according to the Baltic Air Index (BAI). Airport hubs in the United Arab Emirates and Qatar steadily scaled up flight frequencies since the US and Iran agreed to a ceasefire in April, with Dubai-based Emirates announcing last week that 96% of its global network has now been restored. But in a May market report, BAI said a resumption of attacks would pause the recovery. With demand for air cargo on the Asia-Europe corridor continuing to outstrip available capacity constrained by the war, an escalation of hostilities would also keep upward pressure on rates. “Air space across parts of the Gulf remains restricted or closed ... the biggest impact is being felt by Asia-Europe traffic,” BAI said. “In a system with little spare capacity, even modest disruptions now move rates quickly. Even when aircraft are available, longer flight times and operational instability reduce how much cargo they can carry. The result is simple: There is less usable capacity in the system.” The Freightos Air Index also reflected a strengthening of rates. Spot rates from China to Europe on May 10 were up 57% since late February at $5.16/kg, almost 50% higher year over year. Air freight analyst Rotate said in a first quarter report that over the last 26 months, air cargo demand grew 10% against 6% capacity growth, noting that “the gap was adding pressure across the market even before the conflict in the Middle East exacerbated matters.” An estimated 30% of Asia-Europe traffic was routed via the Middle East before the war began on Feb. 28. More than 520,000 tons of international cargo capacity was lost in the first two weeks of March when air space across the Persian Gulf was closed, according to Rotate. Air freight capacity is now back to about 30% of pre-war levels. No sudden demand spike While cargo fills aircraft out of Asia, forwarders note that it is more a reflection of the disruption to the Asia-Europe network rather than a sudden demand spike. “Air freight demand continues to grow, but not at a super high pace for now and is following GDP expectations of plus 3%,” Frank Sobotka, CEO for air and sea at DSV, told analysts Tuesday at the forwarder’s capital markets day. “The drivers are predominantly high-tech cloud computing and still e-commerce from Asia that has shifted from the trans-Pacific corridor following the end of de minimis in the US into the European markets,” he said. DSV reported a 55% increase in first-quarter air cargo volume, boosted by the integration of DB Schenker traffic. But compared with the fourth quarter of 2025, seasonality and capacity constraints in the Middle East dragged sequential quarterly volume down 12%. The Denmark-based forwarder is optimistic about volume growth in the second quarter that it believes will be generated by the summer tender season and further integration of Schenker business. Kuehne + Nagel reported flat volume growth in the first quarter, a slowdown from the 7% growth seen in the last quarter of 2025. The forwarder attributed the slowdown to reduced demand for perishables and e-commerce volumes carried by its Apex subsidiary in Asia, but expects volume in air freight to be “slightly up” in the second quarter compared with the previous year. One air freight operator seeing robust demand is Maersk Air Cargo. Its air freight volume increased 20% in the first quarter compared with the same period last year, which CEO Vincent Clerc attributed to “operational improvements, enhanced productivity and more effective revenue management.” Clerc told analysts during an earnings call last week he is confident the carrier will continue to grow air cargo volume. He also said that air freight, together with ground freight and contract logistics, “will remain a key area for further productivity improvements and profitability gains throughout the year.” Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo Carriers News

Air Cargo

Asia-Europe air cargo rates remain elevated as Gulf tensions escalate

<div class="phx-topic abstract-wrapper">Forwarding costs are being upended by AI-enabled automation, forcing companies to decide what coordination and administrative work needs to be done at origin versus destination. </div>

Forwarding costs are being upended by AI-enabled automation, forcing companies to decide what coordination and administrative work needs to be done at origin versus destination.

<div class="phx-topic">Freight forwarders don’t own cargo, and they are largely reliant on the assets of ocean, air, and road capacity providers. That liminal state puts them right at the center of the debate about whether artificial intelligence will transform how logistics is conducted. Beyond the rhetoric of whether AI can functionally replace hundreds of thousands of people currently employed in operational, sales, development and administrative roles at forwarders, there’s a more basic metric that’s worth tracking. That is, how will AI — or, more specifically, automation enabled by AI — impact a forwarder’s cost structure? Because until recently, the money a forwarder spent per shipment boiled down in large part to how much it spent on labor to perform core tasks along the shipment lifecycle. “For a digitally mature forwarder with decent data and workflow discipline, AI should be able to cut routine file-handling costs by roughly 15% to 35% over the next two to three years,” said Amit Maheshwari, CEO of Softlink, a provider of freight management solutions for forwarders. “On a poor-quality, exception-heavy import file, the savings will be lower. On a clean, repeatable lane with structured inputs, the savings can be higher. “AI changes the math by shrinking the clerical piece of the work, but it does not erase local import knowledge, customer escalation, customs risk, claims handling, or delivery trouble-shooting,” Maheshwari added. A simplistic way to view this challenge is that all the tasks a forwarder needs to execute on each shipment can be visualized on a spectrum of fully manual to fully automated. But that spectrum doesn’t account for the reality that forwarders have long tried to minimize their labor costs outside of automation. Those efforts sometimes come in the form of handing off work to business process outsourcing (BPO) providers, overseas agents, or employees in lower-cost regions. That interplay of optimizing what work is done where, to maximize skills and customer engagement while making sure costs are in line with business expectations, is being upended by AI. <h3>Wider margins, higher growth </h3>JP Morgan, in a February report, posited that, “with successful deployment [of AI], the top European players can gain up to 200 [basis points] of market share and reduce staff costs by 20%, driven by higher productivity and monetizing natural attrition.” That, in turn, has the potential to help large, publicly traded forwarders reach margins of 30% to 45% and double-digit operating profit growth by 2028, the bank said. For arguments’ sake, let’s say that a forwarder using an origin office to handle all administrative aspects of a shipment is paying $120, while that same work handled at destination would cost $180. That 50% premium is the target for AI-enabled workflow automation. “The origin-destination spread is real,” said Jamie Andrade, senior vice president of product management at SEKO Logistics. “A lot of the client-facing work, i.e. the service and differentiation bits we don’t want to offshore or automate away, sits on the destination side, and the labor differential is material. That said, it is getting eroded as costs rise [at origin]. We’re seeing that in our own operation and with our offshore partners. And honestly, you can only shift so much to origin before service starts to suffer.” One example, from a software vendor who asked not to be identified, cited an example of a forwarding customer with nearly 100 IT and key account support staff, and 400 more employees handling basic freight forwarding operations at origin. “They don’t have a plan to reduce labor costs [via automation] because of the complexity of dealing with origin activities,” and because labor costs remain sustainable, the vendor said. “I think we will first see AI improving productivity and reducing manual labor more at the destination than at the origin,” said Hans Elmegaard, CEO of forwarding software vendor Moddule. “At destination, people manually coordinate operational activities between customers, carriers, customs offices, trucking companies/rail services, and share information with [distribution centers] and warehouses across various fragmented datasets. AI-backed orchestration services will help freight forwarders reduce labor costs and increase accuracy for their customers.” <h3>Differentiator or table stakes? </h3>A broader question is the extent to which automation drives differentiation in a crowded market over the long term, and whether a theoretical lower cost to serve bleeds into customer pricing. Forwarding software WiseTech Global, in completely <a href="https://www.joc.com/article/wisetech-pricing-change-tests-shippers-willingness-to-absorb-tech-costs-6127788">restructuring its pricing model</a> last fall and later announcing it was <a href="https://www.joc.com/article/wisetech-says-to-cut-nearly-30-of-workforce-as-it-preps-for-ai-era-6175881">reducing headcount by 30%</a> over two years due to AI productivity gains, essentially signaled to the market that forwarders would have to reduce their cost to serve and that their customers would expect those gains to be passed through. But the danger, argues Graham Cousins, former chief strategy officer at Vanguard Logistics Services, is that automation undermines rather than enhances margin. “The challenge is that, at scale, lower cost-to-serve is not a core differentiator, and perhaps a risk if passed on in customer pricing,” Cousins wrote in a paper on how the international logistics industry was transforming. “AI is not the bolt-on to make operators’ lives and workflows easier,” he wrote. “Customer service processes must be restructured to be AI-native and ensure data coverage, not to augment existing manual operations. Procurement and low cost-to-serve are baselines, not differentiators. If it ends up in pricing, the rest of the market will follow.” So, at its core, the story of AI in forwarding is ultimately about how logistics services providers balance their current cost structure against one where automation plays a bigger role. <h3>What can be automated? </h3>“Most things along the shipment lifecycle are automatable,” said Robert Petti, CEO of forwarding software provider Prompt. “[<a href="https://www.joc.com/article/cargowises-pricing-model-change-could-mark-final-milestone-in-market-ascent-6133279">WiseTech’s new pricing model</a>] should have pushed people to do more automating. And the vast majority doesn’t require new tech. Integrated systems and good [standard operating procedures] should reduce labor cost 30% to 50%. That should get you closer to the origin costs and maybe even lower.” Dan Bailey, CEO of forwarding workflow automation provider Nexcade, said it’s important for a forwarder to focus on a specific time horizon. “We’ve seen two times file-per-head improvements in the specific workflows we target, but we’re also heavily focused on areas with commercial benefit, like procurement and quotation, not just [operating expenditures],” he said. “On simpler workflows it’s higher, but on an aggregate basis across the full lifecycle of all shipments, exceptions are still a primary driver of operational time and cost.” Bailey said those exceptions are impacted less in the short run by AI but are “squarely in strike zone in the medium term,” adding that exception management was also largely unaddressed by business process outsourcing (BPO) efforts in the past. “With automation levels of 60% to 80% of well-scoped processes, there can easily be a three- to four-times cost advantage for that specific process vis-à-vis lower origin per-shipment costs,” Fabian Struck, CEO of forwarding automation vendor Zauber, said. “This advantage is respectively higher for high-wage geographies. In the long run, we can only speculate what will ultimately be possible. For now, I do not see any reasons why total end-to-end shipment costs should not go down as far as three to five times, or even more.” <h3>Low end of the curve </h3>JP Morgan’s report cautioned that the forwarding industry still “sits low on the digitization curve,” with a reliance on manual processes and data that poses a risk to fully leveraging the benefits of AI for cost reduction. “We do not expect AI to disrupt the fundamental prospects of the industry, given its exposure to physical transport and the movement of goods, with freight forwarding increasingly tapping into more complex services and moving further away from commoditized vanilla brokerage services,” the report said. The other factor for forwarders to consider is that investments in technology to automate are not likely to stay static, but in fact are likely to move in a linear fashion with usage. That may prompt some to build internally. “That’s part of why I’m leaning into building some of this ourselves for the easier use cases,” Andrade said. “If I own the tooling, my costs stay flatter as we scale rather than growing in line with transaction volume. It’s not the right answer for everyone, and you need [developer] resources and the appetite to maintain what you build. “But we’ve got that capability, and the new AI coding tooling makes it faster to stand things up than it used to be,” he added. “So that’s where I’m placing my bets, at least on the BPO and automation side of the house.” Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

Freight forwarders don’t own cargo, and they are largely reliant on the assets of ocean, air, and road capacity providers. That liminal state puts them right at the center of the debate about whether artificial intelligence will transform how logistics is conducted. Beyond the rhetoric of whether AI can functionally replace hundreds of thousands of people currently employed in operational, sales, development and administrative roles at forwarders, there’s a more basic metric that’s worth tracking. That is, how will AI — or, more specifically, automation enabled by AI — impact a forwarder’s cost structure? Because until recently, the money a forwarder spent per shipment boiled down in large part to how much it spent on labor to perform core tasks along the shipment lifecycle. “For a digitally mature forwarder with decent data and workflow discipline, AI should be able to cut routine file-handling costs by roughly 15% to 35% over the next two to three years,” said Amit Maheshwari, CEO of Softlink, a provider of freight management solutions for forwarders. “On a poor-quality, exception-heavy import file, the savings will be lower. On a clean, repeatable lane with structured inputs, the savings can be higher. “AI changes the math by shrinking the clerical piece of the work, but it does not erase local import knowledge, customer escalation, customs risk, claims handling, or delivery trouble-shooting,” Maheshwari added. A simplistic way to view this challenge is that all the tasks a forwarder needs to execute on each shipment can be visualized on a spectrum of fully manual to fully automated. But that spectrum doesn’t account for the reality that forwarders have long tried to minimize their labor costs outside of automation. Those efforts sometimes come in the form of handing off work to business process outsourcing (BPO) providers, overseas agents, or employees in lower-cost regions. That interplay of optimizing what work is done where, to maximize skills and customer engagement while making sure costs are in line with business expectations, is being upended by AI. Wider margins, higher growth JP Morgan, in a February report, posited that, “with successful deployment [of AI], the top European players can gain up to 200 [basis points] of market share and reduce staff costs by 20%, driven by higher productivity and monetizing natural attrition.” That, in turn, has the potential to help large, publicly traded forwarders reach margins of 30% to 45% and double-digit operating profit growth by 2028, the bank said. For arguments’ sake, let’s say that a forwarder using an origin office to handle all administrative aspects of a shipment is paying $120, while that same work handled at destination would cost $180. That 50% premium is the target for AI-enabled workflow automation. “The origin-destination spread is real,” said Jamie Andrade, senior vice president of product management at SEKO Logistics. “A lot of the client-facing work, i.e. the service and differentiation bits we don’t want to offshore or automate away, sits on the destination side, and the labor differential is material. That said, it is getting eroded as costs rise [at origin]. We’re seeing that in our own operation and with our offshore partners. And honestly, you can only shift so much to origin before service starts to suffer.” One example, from a software vendor who asked not to be identified, cited an example of a forwarding customer with nearly 100 IT and key account support staff, and 400 more employees handling basic freight forwarding operations at origin. “They don’t have a plan to reduce labor costs [via automation] because of the complexity of dealing with origin activities,” and because labor costs remain sustainable, the vendor said. “I think we will first see AI improving productivity and reducing manual labor more at the destination than at the origin,” said Hans Elmegaard, CEO of forwarding software vendor Moddule. “At destination, people manually coordinate operational activities between customers, carriers, customs offices, trucking companies/rail services, and share information with [distribution centers] and warehouses across various fragmented datasets. AI-backed orchestration services will help freight forwarders reduce labor costs and increase accuracy for their customers.” Differentiator or table stakes? A broader question is the extent to which automation drives differentiation in a crowded market over the long term, and whether a theoretical lower cost to serve bleeds into customer pricing. Forwarding software WiseTech Global, in completely restructuring its pricing model last fall and later announcing it was reducing headcount by 30% over two years due to AI productivity gains, essentially signaled to the market that forwarders would have to reduce their cost to serve and that their customers would expect those gains to be passed through. But the danger, argues Graham Cousins, former chief strategy officer at Vanguard Logistics Services, is that automation undermines rather than enhances margin. “The challenge is that, at scale, lower cost-to-serve is not a core differentiator, and perhaps a risk if passed on in customer pricing,” Cousins wrote in a paper on how the international logistics industry was transforming. “AI is not the bolt-on to make operators’ lives and workflows easier,” he wrote. “Customer service processes must be restructured to be AI-native and ensure data coverage, not to augment existing manual operations. Procurement and low cost-to-serve are baselines, not differentiators. If it ends up in pricing, the rest of the market will follow.” So, at its core, the story of AI in forwarding is ultimately about how logistics services providers balance their current cost structure against one where automation plays a bigger role. What can be automated? “Most things along the shipment lifecycle are automatable,” said Robert Petti, CEO of forwarding software provider Prompt. “[ WiseTech’s new pricing model ] should have pushed people to do more automating. And the vast majority doesn’t require new tech. Integrated systems and good [standard operating procedures] should reduce labor cost 30% to 50%. That should get you closer to the origin costs and maybe even lower.” Dan Bailey, CEO of forwarding workflow automation provider Nexcade, said it’s important for a forwarder to focus on a specific time horizon. “We’ve seen two times file-per-head improvements in the specific workflows we target, but we’re also heavily focused on areas with commercial benefit, like procurement and quotation, not just [operating expenditures],” he said. “On simpler workflows it’s higher, but on an aggregate basis across the full lifecycle of all shipments, exceptions are still a primary driver of operational time and cost.” Bailey said those exceptions are impacted less in the short run by AI but are “squarely in strike zone in the medium term,” adding that exception management was also largely unaddressed by business process outsourcing (BPO) efforts in the past. “With automation levels of 60% to 80% of well-scoped processes, there can easily be a three- to four-times cost advantage for that specific process vis-à-vis lower origin per-shipment costs,” Fabian Struck, CEO of forwarding automation vendor Zauber, said. “This advantage is respectively higher for high-wage geographies. In the long run, we can only speculate what will ultimately be possible. For now, I do not see any reasons why total end-to-end shipment costs should not go down as far as three to five times, or even more.” Low end of the curve JP Morgan’s report cautioned that the forwarding industry still “sits low on the digitization curve,” with a reliance on manual processes and data that poses a risk to fully leveraging the benefits of AI for cost reduction. “We do not expect AI to disrupt the fundamental prospects of the industry, given its exposure to physical transport and the movement of goods, with freight forwarding increasingly tapping into more complex services and moving further away from commoditized vanilla brokerage services,” the report said. The other factor for forwarders to consider is that investments in technology to automate are not likely to stay static, but in fact are likely to move in a linear fashion with usage. That may prompt some to build internally. “That’s part of why I’m leaning into building some of this ourselves for the easier use cases,” Andrade said. “If I own the tooling, my costs stay flatter as we scale rather than growing in line with transaction volume. It’s not the right answer for everyone, and you need [developer] resources and the appetite to maintain what you build. “But we’ve got that capability, and the new AI coding tooling makes it faster to stand things up than it used to be,” he added. “So that’s where I’m placing my bets, at least on the BPO and automation side of the house.” Contact Eric Johnson at eric.johnson@spglobal.com .

Logistics Technology News

Supply chain

AI throwing wrench into arbitrage machine for forwarding labor

<div class="phx-topic abstract-wrapper">Strong demand for roll-on/roll-off cargoes is expected to continue through 2026 as China enjoys “exceptional” export growth.</div>

Strong demand for roll-on/roll-off cargoes is expected to continue through 2026 as China enjoys “exceptional” export growth.

<div class="phx-topic">An unprecedented surge in Chinese vehicle shipments and a fledgling recovery in high and heavy cargo volumes are helping to tighten vehicle carrier markets and offset a war-related downturn in the Middle East, car carrier executives say. “We are facing quite exceptional growth in Chinese vehicle exports,” which grew 57% year over year to 2.2 million units in the first quarter, Andreas Enger, CEO of Höegh Autoliners, said during an online first-quarter results briefing May 8. Enger said exports of hybrid vehicles from China increased 112% to 514,000 units in the quarter from a year earlier, while the export volumes of electric vehicles rose 52% to 616,000, largely due to higher energy prices. Lasse Kristoffersen, Wallenius Wilhelmsen’s president and CEO, said China is on course to export approximately 8 million vehicles this year compared with 6 million last year. China, combined with vehicle exports from South Korea and Japan, meant manufacturers’ export push out of Asia “is enormous,” Kristoffersen said during a first-quarter briefing May 6. “We believe this [growth] story has just started,” he added. “It’s certainly not ending anytime soon.” <h3>Solid demand expected to continue </h3>Both Enger and Kristoffersen expected the strong demand to continue for the rest of this year, with solid volumes and high utilization to maintain pace despite geopolitical uncertainty. They said shipments of high and heavy equipment such as construction and mining trucks are also recovering this year following a two-year downturn. Deep-sea shipments of construction equipment from Asia were up 31% year over year in the first quarter, helped by a 39% increase in equipment exports from China, Enger said. Global high and heavy sales are expected to rise 4% this year to $237 billion, followed by a 5% increase to $249 billion next year, he added. Still, worries over US tariff policy and higher fuel prices and interest rates are dampening export demand for US-made agricultural equipment, Kristoffersen added. He said demand for car carriers had reignited during the first quarter on the back of strong vehicle export demand and tight vessel capacity as carriers slow-steamed vessels to conserve fuel and vessels diverted away from the Middle East. That pushed up charter rates in the first quarter despite the addition of 16 new ships to the global fleet. Höegh Autoliners said rates for a 6,800-car equivalent unit (CEU) vessel surged 29% quarter over quarter to $55,000 per day in the first quarter, after having dropped to a nearly four-year low at the end of last year. Höegh Autoliners CFO Espen Stubberud said the carrier tried to charter ships for short-term cargo fixtures in the first quarter “but there were only a few vessels available.” About 50 ships, equivalent to 7% of the global car carrier fleet, are scheduled for delivery this year, including 34 between now and the end of the year. But that extra tonnage is expected to be absorbed by increased cargo demand, especially vehicle exports from Asia. <h3>Limited impact from war </h3>Both Höegh and Wallenius said there has been little overall impact so far from the war in the Middle East. “Maybe 2% of our revenue is in ships linked to the Middle East,” Kristoffersen said. Wallenius Wilhelmsen has one vessel still inside the Strait of Hormuz, while Höegh’s Enger said its only vessel in the Persian Gulf, the 6,000-CEU Alliance Fairfax, was escorted out of the waterway by the US Navy on May 4. Enger said Höegh is continuing to call at ports in the northern Red Sea via the Suez Canal, but has suspended Persian Gulf services, a disruption that will likely impact the company by $10 million in the second quarter. Overall, Höegh saw net profit slide to $103 million in the first quarter from $155 million a year earlier, although that included a $41 million gain from the sale of a ship. First-quarter revenues were 9% higher at $360 million. Total cargo volumes climbed 15% year over year to 3.9 million cubic meters, while average freight rates were flat at $80/cubic meter. High and heavy volumes increased 23% to 856,000 cubic meters in the first quarter, or 22% of the total. That compared with 694,000 cubic meters, or 20% of total volumes, last year. Wallenius Wilhelmsen said its first-quarter net profit fell 28% to $177 million, partly due to digital transformation costs and restructuring expenses. Revenues were largely unchanged at almost $1.3 billion. Wilhelmsen’s shipping division saw revenues slide 3% to $943 million due to a 5% drop in freight rates because of changes in the trade mix. The revenue slide also came despite a 4% increase in volumes to 13.1 million cubic meters. The carrier said its high and heavy volumes grew 20% year over year to 3.3 million cubic meters, its highest level in 18 months. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

An unprecedented surge in Chinese vehicle shipments and a fledgling recovery in high and heavy cargo volumes are helping to tighten vehicle carrier markets and offset a war-related downturn in the Middle East, car carrier executives say. “We are facing quite exceptional growth in Chinese vehicle exports,” which grew 57% year over year to 2.2 million units in the first quarter, Andreas Enger, CEO of Höegh Autoliners, said during an online first-quarter results briefing May 8. Enger said exports of hybrid vehicles from China increased 112% to 514,000 units in the quarter from a year earlier, while the export volumes of electric vehicles rose 52% to 616,000, largely due to higher energy prices. Lasse Kristoffersen, Wallenius Wilhelmsen’s president and CEO, said China is on course to export approximately 8 million vehicles this year compared with 6 million last year. China, combined with vehicle exports from South Korea and Japan, meant manufacturers’ export push out of Asia “is enormous,” Kristoffersen said during a first-quarter briefing May 6. “We believe this [growth] story has just started,” he added. “It’s certainly not ending anytime soon.” Solid demand expected to continue Both Enger and Kristoffersen expected the strong demand to continue for the rest of this year, with solid volumes and high utilization to maintain pace despite geopolitical uncertainty. They said shipments of high and heavy equipment such as construction and mining trucks are also recovering this year following a two-year downturn. Deep-sea shipments of construction equipment from Asia were up 31% year over year in the first quarter, helped by a 39% increase in equipment exports from China, Enger said. Global high and heavy sales are expected to rise 4% this year to $237 billion, followed by a 5% increase to $249 billion next year, he added. Still, worries over US tariff policy and higher fuel prices and interest rates are dampening export demand for US-made agricultural equipment, Kristoffersen added. He said demand for car carriers had reignited during the first quarter on the back of strong vehicle export demand and tight vessel capacity as carriers slow-steamed vessels to conserve fuel and vessels diverted away from the Middle East. That pushed up charter rates in the first quarter despite the addition of 16 new ships to the global fleet. Höegh Autoliners said rates for a 6,800-car equivalent unit (CEU) vessel surged 29% quarter over quarter to $55,000 per day in the first quarter, after having dropped to a nearly four-year low at the end of last year. Höegh Autoliners CFO Espen Stubberud said the carrier tried to charter ships for short-term cargo fixtures in the first quarter “but there were only a few vessels available.” About 50 ships, equivalent to 7% of the global car carrier fleet, are scheduled for delivery this year, including 34 between now and the end of the year. But that extra tonnage is expected to be absorbed by increased cargo demand, especially vehicle exports from Asia. Limited impact from war Both Höegh and Wallenius said there has been little overall impact so far from the war in the Middle East. “Maybe 2% of our revenue is in ships linked to the Middle East,” Kristoffersen said. Wallenius Wilhelmsen has one vessel still inside the Strait of Hormuz, while Höegh’s Enger said its only vessel in the Persian Gulf, the 6,000-CEU Alliance Fairfax, was escorted out of the waterway by the US Navy on May 4. Enger said Höegh is continuing to call at ports in the northern Red Sea via the Suez Canal, but has suspended Persian Gulf services, a disruption that will likely impact the company by $10 million in the second quarter. Overall, Höegh saw net profit slide to $103 million in the first quarter from $155 million a year earlier, although that included a $41 million gain from the sale of a ship. First-quarter revenues were 9% higher at $360 million. Total cargo volumes climbed 15% year over year to 3.9 million cubic meters, while average freight rates were flat at $80/cubic meter. High and heavy volumes increased 23% to 856,000 cubic meters in the first quarter, or 22% of the total. That compared with 694,000 cubic meters, or 20% of total volumes, last year. Wallenius Wilhelmsen said its first-quarter net profit fell 28% to $177 million, partly due to digital transformation costs and restructuring expenses. Revenues were largely unchanged at almost $1.3 billion. Wilhelmsen’s shipping division saw revenues slide 3% to $943 million due to a 5% drop in freight rates because of changes in the trade mix. The revenue slide also came despite a 4% increase in volumes to 13.1 million cubic meters. The carrier said its high and heavy volumes grew 20% year over year to 3.3 million cubic meters, its highest level in 18 months. Contact Keith Wallis at keithwallis@hotmail.com .

Container lines

Asia-Europe

Surging Asia vehicle exports, high/heavy rebound buoy carrier operators

<div class="phx-topic abstract-wrapper">Even before the war-driven spike in gasoline prices, the US automotive industry was expecting lower vehicle sales due to import tariffs and higher borrowing costs for vehicle buyers. </div>

Even before the war-driven spike in gasoline prices, the US automotive industry was expecting lower vehicle sales due to import tariffs and higher borrowing costs for vehicle buyers.

<div class="phx-topic">(The following story appears in the Top 100 Importers and Exporters issue of the Journal of Commerce magazine published on May 4, 2026.) US demand for automobiles and auto parts has been straining under higher inflationary costs, but buyers, both consumers and manufacturers, will face another level of sticker shock if the war in the Middle East extends into the summer. Even before the war-driven spike in gasoline prices, the US automotive industry was steeling for a tough year. Prior to the start of the conflict, Journal of Commerce parent company S&amp;P Global forecast that vehicle sales would fall 2% from the previous year due to a long list of headwinds for the industry, including higher borrowing costs for vehicle buyers and steel tariffs upping input prices. But already relatively high prices for new vehicles and auto parts — the cheapest new 2026 model car available is $20,550, according to CARFAX — will increase significantly if the war continues through May, according to a mid-March report from S&amp;P Global. If the war lasts through the end of 2026, that elevated pricing will negatively impact consumer demand and, by extension, container volumes. A war scenario of more than a year will result in continued inflation and declining demand until prices reach a new “set point,” S&amp;P Global analysts said. Containerized US imports of automobiles and auto parts fell 9.4% year over year in 2025, dragging the five-year compound annual growth rate (CAGR) down to 3.8%, according to PIERS, a Journal of Commerce sister product within S&amp;P Global. Exports, meanwhile, spiked 15.3%, boosting the five-year CAGR to 6.6%. The majority of seaborne vehicle imports and exports travel via roll-on/roll-off (ro/ro) ships; those volumes are not captured by PIERS data. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="21c4be02-a1d9-4421-8e74-cde94062cc7d"></dynamic-object></div>The uncertainties surrounding the length of the war will undoubtedly impact the US container trade in vehicles and parts as importers and exporters in the automotive sector review and possibly modify their business plans, said Chris Hopson, principal analyst for the global light vehicle forecast group at S&amp;P Global. “2025 was an uncertain year because of the tariffs, and the auto industry digested it better than we might have expected,” Hopson said. However, due to the war in Iran, how long the industry can continue to bear those higher costs “is open to question.” The weakening market for new US car sales has a silver lining for importers of aftermarket parts used to maintain and repair vehicles, such as filters, batteries and brakes. Customers of Advance Auto Parts, who are often in one of the most economically depressed cohorts, typically would rather keep their cars running a little longer than shop for a new car, said CEO Shane O’Kelly. “That car is how they get to work; it’s how they get to church; [how] they get the kids to activities,” O’Kelly told investors during a March 11 earnings call. “If that thing is not running, they’re getting it fixed, so I don’t necessarily see demand curtailing.” <h3>‘General inconsistencies’ </h3>Auto parts importers have been looking — and will continue to look — at changing sourcing away from China to Southeast Asia and the Indian subcontinent because of the higher tariffs imposed last year, according to Steve Hughes, a consultant for the aftermarket auto parts industry. But those changes can’t happen overnight, Hughes explained, because it takes anywhere from six months to two years to set up operations in a new location. Mainland China accounted for 35.2% of US containerized autos and parts imports last year, down from more than 40% as recently as 2021, according to PIERS. The primary beneficiaries of China’s declining market share, South Korea and Japan, have increased their combined share of the market to 27% from 20.8% during that period. Noel Hacegaba, CEO of the Port of Long Beach, said the port has experienced a general shift of sourcing of most imports, including autos and auto parts, away from China to other countries. Imports of passenger vehicles landing in Long Beach, mostly on ro/ro ships, were flat in 2025, while exports rose 6.2% year over year, according to Hacegaba. Containerized auto parts imports through the port rose 1.1%, while exports fell 15%. Los Angeles-Long Beach is the busiest US port complex for containerized auto imports. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="fec38ae3-22df-41b8-94f2-7b395028700a"></dynamic-object></div>The Port of Baltimore, also a major gateway for ro/ro and containerized auto imports and exports, continues to feel the impact of tariffs. Those impacts are reflected in the higher prices consumers must pay, but the problem runs even deeper than cost, said Jonathan Daniels, executive director of the Maryland Port Administration (MPA). “The biggest issue we have seen with shippers is the general inconsistencies in the tariffs,” Daniels told the Journal of Commerce. Although original equipment manufacturers take higher tariff costs as a given, not knowing the exact rate for finished vehicles and components makes it difficult to make strategic sourcing and production decisions, Daniels explained. Depending on the level of tariffs on each, it might be cheaper to import fully assembled cars, or it might make more sense to import the necessary pieces and assemble them in the US. Despite these uncertainties, more than 700,000 automobiles and light trucks crossed Baltimore’s docks for the 13th consecutive year in 2025, according to MPA data. Daniels said the port continues to develop infrastructure to support processing facilities in the region, adding that exports of damaged cars to West Africa to be used for parts remains a bright spot for the industry. For containerized exports, the largest individual markets are the United Arab Emirates and Georgia, which accounted for 12% and 11.8% of outbound auto and part shipments, respectively, with no other country exceeding 10%, according to PIERS. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

(The following story appears in the Top 100 Importers and Exporters issue of the Journal of Commerce magazine published on May 4, 2026.) US demand for automobiles and auto parts has been straining under higher inflationary costs, but buyers, both consumers and manufacturers, will face another level of sticker shock if the war in the Middle East extends into the summer. Even before the war-driven spike in gasoline prices, the US automotive industry was steeling for a tough year. Prior to the start of the conflict, Journal of Commerce parent company S&P Global forecast that vehicle sales would fall 2% from the previous year due to a long list of headwinds for the industry, including higher borrowing costs for vehicle buyers and steel tariffs upping input prices. But already relatively high prices for new vehicles and auto parts — the cheapest new 2026 model car available is $20,550, according to CARFAX — will increase significantly if the war continues through May, according to a mid-March report from S&P Global. If the war lasts through the end of 2026, that elevated pricing will negatively impact consumer demand and, by extension, container volumes. A war scenario of more than a year will result in continued inflation and declining demand until prices reach a new “set point,” S&P Global analysts said. Containerized US imports of automobiles and auto parts fell 9.4% year over year in 2025, dragging the five-year compound annual growth rate (CAGR) down to 3.8%, according to PIERS, a Journal of Commerce sister product within S&P Global. Exports, meanwhile, spiked 15.3%, boosting the five-year CAGR to 6.6%. The majority of seaborne vehicle imports and exports travel via roll-on/roll-off (ro/ro) ships; those volumes are not captured by PIERS data. The uncertainties surrounding the length of the war will undoubtedly impact the US container trade in vehicles and parts as importers and exporters in the automotive sector review and possibly modify their business plans, said Chris Hopson, principal analyst for the global light vehicle forecast group at S&P Global. “2025 was an uncertain year because of the tariffs, and the auto industry digested it better than we might have expected,” Hopson said. However, due to the war in Iran, how long the industry can continue to bear those higher costs “is open to question.” The weakening market for new US car sales has a silver lining for importers of aftermarket parts used to maintain and repair vehicles, such as filters, batteries and brakes. Customers of Advance Auto Parts, who are often in one of the most economically depressed cohorts, typically would rather keep their cars running a little longer than shop for a new car, said CEO Shane O’Kelly. “That car is how they get to work; it’s how they get to church; [how] they get the kids to activities,” O’Kelly told investors during a March 11 earnings call. “If that thing is not running, they’re getting it fixed, so I don’t necessarily see demand curtailing.” ‘General inconsistencies’ Auto parts importers have been looking — and will continue to look — at changing sourcing away from China to Southeast Asia and the Indian subcontinent because of the higher tariffs imposed last year, according to Steve Hughes, a consultant for the aftermarket auto parts industry. But those changes can’t happen overnight, Hughes explained, because it takes anywhere from six months to two years to set up operations in a new location. Mainland China accounted for 35.2% of US containerized autos and parts imports last year, down from more than 40% as recently as 2021, according to PIERS. The primary beneficiaries of China’s declining market share, South Korea and Japan, have increased their combined share of the market to 27% from 20.8% during that period. Noel Hacegaba, CEO of the Port of Long Beach, said the port has experienced a general shift of sourcing of most imports, including autos and auto parts, away from China to other countries. Imports of passenger vehicles landing in Long Beach, mostly on ro/ro ships, were flat in 2025, while exports rose 6.2% year over year, according to Hacegaba. Containerized auto parts imports through the port rose 1.1%, while exports fell 15%. Los Angeles-Long Beach is the busiest US port complex for containerized auto imports. The Port of Baltimore, also a major gateway for ro/ro and containerized auto imports and exports, continues to feel the impact of tariffs. Those impacts are reflected in the higher prices consumers must pay, but the problem runs even deeper than cost, said Jonathan Daniels, executive director of the Maryland Port Administration (MPA). “The biggest issue we have seen with shippers is the general inconsistencies in the tariffs,” Daniels told the Journal of Commerce. Although original equipment manufacturers take higher tariff costs as a given, not knowing the exact rate for finished vehicles and components makes it difficult to make strategic sourcing and production decisions, Daniels explained. Depending on the level of tariffs on each, it might be cheaper to import fully assembled cars, or it might make more sense to import the necessary pieces and assemble them in the US. Despite these uncertainties, more than 700,000 automobiles and light trucks crossed Baltimore’s docks for the 13th consecutive year in 2025, according to MPA data. Daniels said the port continues to develop infrastructure to support processing facilities in the region, adding that exports of damaged cars to West Africa to be used for parts remains a bright spot for the industry. For containerized exports, the largest individual markets are the United Arab Emirates and Georgia, which accounted for 12% and 11.8% of outbound auto and part shipments, respectively, with no other country exceeding 10%, according to PIERS. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

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