<div class="phx-topic abstract-wrapper">The current market situation — amid the Red Sea crisis, growing port congestion and a sudden rise in demand — is similar to the early parts of the pandemic, where insufficient capacity led to the largest rate increases the industry has ever seen, writes Lars Jensen.</div>

The current market situation — amid the Red Sea crisis, growing port congestion and a sudden rise in demand — is similar to the early parts of the pandemic, where insufficient capacity led to the largest rate increases the industry has ever seen, writes Lars Jensen.

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<div>The container shipping market right now can at best be described as teetering at the top of a sharp pyramid. The ability to predict&nbsp;— even roughly&nbsp;— what freight rates will do over the next six months appears more difficult than ever. This is because the two most likely paths lead to extremely different outcomes.<div><img></div>But to understand this precarious balancing act, it is necessary to think of the underlying market balance as being comprised of several layers.&nbsp;Layer 1&nbsp;— the baseline fundamentals. This is where demand growth of some 8% over the past five years combined with fleet growth of 25% has...

The container shipping market right now can at best be described as teetering at the top of a sharp pyramid. The ability to predict — even roughly — what freight rates will do over the next six months appears more difficult than ever. This is because the two most likely paths lead to extremely different outcomes. But to understand this precarious balancing act, it is necessary to think of the underlying market balance as being comprised of several layers.  Layer 1 — the baseline fundamentals. This is where demand growth of some 8% over the past five years combined with fleet growth of 25% has created substantial overcapacity. Quite a bit of this capacity has indeed been absorbed through slow-steaming, but there is overcapacity nonetheless. We will still see some 1.5 million TEUs of capacity injected in the rest of 2024, and hence the overcapacity will worsen.  Layer 2 — the Red Sea crisis. The much longer sailing distances around southern Africa mean a sharp change in demand when measured in TEU miles. Essentially, the overcapacity seen in layer 1 is just enough to cope with the new diversions around Africa, provided vessels are sped up again and — crucially — provided there are no additional disruptions.  Layer 3 — increasing port congestion. Port congestion in Asia and the Western Mediterranean has been gradually worsening for several months. It appears to have flown somewhat under the radar, almost like the proverbial boiling of a frog which doesn’t notice the problem if you only increase the water temperature slowly. However, this has come to reach a boiling point over the past month. And as the developments in layer 2 led to a situation with zero excess capacity to deal with new problems, it means that in layer 3 we now have insufficient capacity in the global supply/demand balance.  Layer 4 — a sudden sharp spike in demand . In reality, this appears to have caught everyone by surprise, and to some degree even the carriers. A good hypothesis presently is that this is an extremely early onset of the peak season. It would fit the mentality of shippers anxious that the peak season might see large scale disruptions on the US East Coast if labor negotiations break down . Also, an earlier peak season should be expected for any services being diverted around Africa. Finally, it appears that while container shipping is seeing a sudden sharp spike in demand, the same is not the case for air freight. If the sudden sharp demand was driven by a sudden buying rush by consumers, one would expect that air freight had also seen such a sudden spike.  Layer 4 is to some degree the straw that broke the camel’s back in terms of capacity shortages.   Echoes of the pandemic market  The market situation right now is similar to the early parts of the pandemic disruptions where insufficient capacity led to the largest rate increases the industry had ever seen. If the market remains at layer 4 — and especially if this is not just a temporary early peak season but a sustained boom — then the rate development is poised to do a repeat of the pandemic disruptions.  However, if the Red Sea routing reopens — which is unlikely right now, but not out of the realm of possibility in a few months — this would instantly recreate the substantial overcapacity the market was grappling with at the end of 2023 and could cause a sharp drop in spot rates. The difficult state of affairs for shippers trying to plan their supply chains and, importantly, manage their freight budgets for the rest of 2024 is therefore that the two most likely scenarios appear to go in two extremely different directions.    It is entirely possible that we could again see the rate spikes of pandemic-level proportions. There were already offers over $10,000 per FEU floating in the market as of May 20 from Asia to the US East Coast. Platts, a sister company of the Journal of Commerce within S&P Global, pegged spot rates on the North Asia to USEC route at $6,425 per FEU as of May 21, up 5% on the week and 179% from a year ago. But it is also entirely possible that if we are only seeing a short-term spike in demand due to an early peak season, and if the Red Sea reopens, we could see freight rates plummet back to the depths seen in the later parts of 2023.  Which scenario plays out is especially dependent on predicting the reopening of the Suez route. With continued sporadic attacks by the Houthis operating in Yemen, global carriers continue to be cautious, with CMA CGM the only exception among major carriers to have a few Asia-Med vessels go through the still-risky passage.  Contact Lars Jensen at  lars.jensen@vespucci-maritime.com .      

International ports

Container lines

Asia-Europe

Trans-Pacific

North American ports

Maritime

Container shipping entering a ‘precarious balancing act’: analyst

<div class="phx-topic abstract-wrapper">The days where container ships could be seen as fungible assets used in flexible ways might be coming to an end, leading to inefficiencies — and higher costs — in global liner networks, writes Lars Jensen.</div>

The days where container ships could be seen as fungible assets used in flexible ways might be coming to an end, leading to inefficiencies — and higher costs — in global liner networks, writes Lars Jensen.

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<div class="phx-topic">For stakeholders in the container shipping supply chain, the past four to five months have been a flurry of rapid changes in relation to US tariff policy. It is easy to be caught up in the turmoil that this has caused, including rapid demand and supply swings as well as likely the sharpest and shortest spike in spot rates ever seen on the trans-Pacific. And it is also clear that this kind of turmoil will continue with the US now focusing on potentially implementing tariffs on furniture, which makes up some 7% of total US imports by container volume. An unresolved tariff situation with China and a significant lack of detail around the trade deals already announced only add to the potential volatility. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6070975_0.1.jpg"></img></div>However, there is a potentially more important change beginning to happen that is more global in nature and goes beyond tariffs, one that, to some degree, will challenge the fundamental workings of how shipping networks are usually operated. For the most part, the vessels themselves are fungible assets. If I have a vessel with a capacity of, say, 5,000 TEUs, I can essentially use this vessel anywhere globally, moving any type of cargo in a container for anyone, as well as changing the flag to almost any nation of my choosing. And if I have no need for the vessel, I can sell or charter it to anyone who, in turn, will have the same high degree of flexibility regarding the usage of the vessel. This makes the fleet of container vessels extremely versatile and allows a highly efficient cascading process whereby, for the most part, vessels are moved to the trades where they are most optimally used. Balancing capacity not only with demand but also the capability of port infrastructure allows for a high degree of asset utilization, and consequently, lower costs for shippers. <h3>Efficiency ‘coming under pressure’ </h3>It is this efficiency that is coming under pressure. Keep in mind that part of the value is the fungibility of the vessels — that they can be used anywhere, by anyone, for anyone. This ensures assets are used where they are most suitable. But consider the developments we have seen here in 2025: The US is placing penalties on vessels built, owned or operated in China. This is already beginning to result in network changes as carriers will either shift some port calls and/or phase in vessels from other trades. This would mean suboptimal usage of vessels and ports in order to reduce this externally imposed cost. India prohibited the call of vessels coming from Pakistan, resulting in a sharp reduction of direct services from Pakistan to the rest of the world. Instead, more feeder services were established — clearly suboptimal vessel usage compared with having large vessels call both nations on major deep-sea services. Turkey is prohibiting Israeli-affiliated vessels from calling Turkish ports and is also prohibiting Turkish-flagged vessels from calling Israel. The conflict between Thailand and Cambodia resulted in the closure of the land border, effectively preventing vessels calling the major port in Laem Chabang from efficiently servicing Cambodian imports and exports. Twenty-five container vessels were placed on the US OFAC sanctions list as they were seen as affiliated with Iranian logistics operations, effectively removing approximately one-third of SeaLead Shipping’s fleet from one day to the next. These are merely a few examples from 2025. We have, of course, seen various restrictions in the past, but the speed and scale with which this is ramping up is new. Later in 2025, we will likely see the results of the US Federal Maritime Commission’s investigation into unfair flag state competition. There are no prizes for guessing that, yes, of course there is a skewed competitive landscape — that is why flags of convenience have been popular for centuries. The only relevant question is which type of additional regulations and restrictions the US will then impose based on nationality. Then comes the debacle concerning the carbon tax on marine fossil fuels, which is likely to be adopted at the October meeting of the International Maritime Organization’s Marine Environment Protection Committee. It is crystal clear that the US will not participate. The open question is how many other countries will side with the US, creating more loopholes based on nationality. All in all, the days where container vessels to a significant degree could be seen as fungible assets might be coming to an end. Not that all flexibility will be lost. However, the flexibility is rapidly being reduced, which leads to inefficiencies in the global container liner networks. And inefficiencies equal costs. 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>

For stakeholders in the container shipping supply chain, the past four to five months have been a flurry of rapid changes in relation to US tariff policy. It is easy to be caught up in the turmoil that this has caused, including rapid demand and supply swings as well as likely the sharpest and shortest spike in spot rates ever seen on the trans-Pacific. And it is also clear that this kind of turmoil will continue with the US now focusing on potentially implementing tariffs on furniture, which makes up some 7% of total US imports by container volume. An unresolved tariff situation with China and a significant lack of detail around the trade deals already announced only add to the potential volatility. However, there is a potentially more important change beginning to happen that is more global in nature and goes beyond tariffs, one that, to some degree, will challenge the fundamental workings of how shipping networks are usually operated. For the most part, the vessels themselves are fungible assets. If I have a vessel with a capacity of, say, 5,000 TEUs, I can essentially use this vessel anywhere globally, moving any type of cargo in a container for anyone, as well as changing the flag to almost any nation of my choosing. And if I have no need for the vessel, I can sell or charter it to anyone who, in turn, will have the same high degree of flexibility regarding the usage of the vessel. This makes the fleet of container vessels extremely versatile and allows a highly efficient cascading process whereby, for the most part, vessels are moved to the trades where they are most optimally used. Balancing capacity not only with demand but also the capability of port infrastructure allows for a high degree of asset utilization, and consequently, lower costs for shippers. Efficiency ‘coming under pressure’ It is this efficiency that is coming under pressure. Keep in mind that part of the value is the fungibility of the vessels — that they can be used anywhere, by anyone, for anyone. This ensures assets are used where they are most suitable. But consider the developments we have seen here in 2025: The US is placing penalties on vessels built, owned or operated in China. This is already beginning to result in network changes as carriers will either shift some port calls and/or phase in vessels from other trades. This would mean suboptimal usage of vessels and ports in order to reduce this externally imposed cost. India prohibited the call of vessels coming from Pakistan, resulting in a sharp reduction of direct services from Pakistan to the rest of the world. Instead, more feeder services were established — clearly suboptimal vessel usage compared with having large vessels call both nations on major deep-sea services. Turkey is prohibiting Israeli-affiliated vessels from calling Turkish ports and is also prohibiting Turkish-flagged vessels from calling Israel. The conflict between Thailand and Cambodia resulted in the closure of the land border, effectively preventing vessels calling the major port in Laem Chabang from efficiently servicing Cambodian imports and exports. Twenty-five container vessels were placed on the US OFAC sanctions list as they were seen as affiliated with Iranian logistics operations, effectively removing approximately one-third of SeaLead Shipping’s fleet from one day to the next. These are merely a few examples from 2025. We have, of course, seen various restrictions in the past, but the speed and scale with which this is ramping up is new. Later in 2025, we will likely see the results of the US Federal Maritime Commission’s investigation into unfair flag state competition. There are no prizes for guessing that, yes, of course there is a skewed competitive landscape — that is why flags of convenience have been popular for centuries. The only relevant question is which type of additional regulations and restrictions the US will then impose based on nationality. Then comes the debacle concerning the carbon tax on marine fossil fuels, which is likely to be adopted at the October meeting of the International Maritime Organization’s Marine Environment Protection Committee. It is crystal clear that the US will not participate. The open question is how many other countries will side with the US, creating more loopholes based on nationality. All in all, the days where container vessels to a significant degree could be seen as fungible assets might be coming to an end. Not that all flexibility will be lost. However, the flexibility is rapidly being reduced, which leads to inefficiencies in the global container liner networks. And inefficiencies equal costs. Lars Jensen is CEO and partner at Vespucci Maritime. Contact him at lars.jensen@vespucci-maritime.com .

External pressures putting ‘fungibility’ of container shipping at risk: analyst

<div class="phx-topic abstract-wrapper">Robert Primus has been vocal in his opposition to consolidation in the rail industry, voting against the Canadian Pacific-Kansas City Southern merger in 2023 and Canadian National Railway’s acquisition of Iowa Northern Railway earlier this year.</div>

Robert Primus has been vocal in his opposition to consolidation in the rail industry, voting against the Canadian Pacific-Kansas City Southern merger in 2023 and Canadian National Railway’s acquisition of Iowa Northern Railway earlier this year.

<div class="phx-topic">President Donald Trump’s move to oust Robert Primus from the US Surface Transportation Board (STB) would seem to eliminate a key obstacle to securing regulatory approval for Union Pacific Railroad’s $85 billion acquisition of Norfolk Southern Railway (NS). Trump “fired” Primus from the STB on Wednesday, according to <a href="https://www.wsj.com/politics/policy/trump-fires-board-member-of-regulator-weighing-rail-merger-4b108713?mod=Searchresults&amp;pos=1&amp;page=1">The Wall Street Journal.</a> But Primus, who called the move “legally invalid,” said he would continue performing his duties as a member of the board, The Journal reported. His removal, if upheld, comes as the board prepares to evaluate Union Pacific’s proposed acquisition of Norfolk Southern in the coming months, a deal that would create the nation’s first transcontinental freight railroad. It also sets up a potential legal showdown, similar to the one Trump faces in the aftermath of his move earlier this week to fire Lisa Cook from the board of the Federal Reserve. Trump, since his return to office in January, has acted on several occasions to remove members from boards and regulatory agencies and replace them with people seen as loyal to his agenda. Ironically, it was Trump who appointed Primus, a Democrat, to the STB in 2020. His apparent ouster means there are now two Republicans and only one Democrat on the board, which can have up to five members. The Sheet Metal, Air, Rail and Transportation (SMART), the largest rail labor union, criticized the firing. SMART-TD, the transportation division covering rail engineers, has come out against UP’s acquisition of NS. “This action is unprecedented, unlawful in spirit, and reeks of direct interference from hedge funds and the nation’s largest rail carriers,” the union said in a statement Thursday. “The timing of this move cannot be ignored. Prior to its submission to the board, Mr. Primus has made clear his opposition to the so-called ‘merger’ that would be a corporate takeover combining Union Pacific Railroad and Norfolk Southern Railroad.” <h3>Voted against CP-KCS deal </h3>Primus has been vocal in his opposition to consolidation in the rail industry, voting against the Canadian Pacific-Kansas City Southern merger in 2023 and Canadian National Railway’s acquisition of Iowa Northern Railway earlier this year. Removing him from the STB would seem to give the UP-NS deal a far easier avenue to gain the required approval from federal regulators. “We believe the move comes in an effort to clear the path for the potential transcontinental merger,” Jason Seidl, a transportation analyst with TD Securities, wrote in an investor’s note Thursday. “We believe a Republican appointment could still be forthcoming as channel checks indicated four candidates in contention, potentially leaving the [STB] with a 3-1 Republican majority by the time a decision has to be made.” By law, no single political party can have more than three out of the five available seats on the Surface Transportation Board. Chairman Patrick Fuchs and member Michelle Schultz are Republicans, while member Karen Hedlund is a Democrat. There is already an existing vacancy on the board. UP and NS will file their formal merger application by January, kicking off an STB review that would likely not result in a final vote until the spring of 2027, if not later. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

President Donald Trump’s move to oust Robert Primus from the US Surface Transportation Board (STB) would seem to eliminate a key obstacle to securing regulatory approval for Union Pacific Railroad’s $85 billion acquisition of Norfolk Southern Railway (NS). Trump “fired” Primus from the STB on Wednesday, according to The Wall Street Journal. But Primus, who called the move “legally invalid,” said he would continue performing his duties as a member of the board, The Journal reported. His removal, if upheld, comes as the board prepares to evaluate Union Pacific’s proposed acquisition of Norfolk Southern in the coming months, a deal that would create the nation’s first transcontinental freight railroad. It also sets up a potential legal showdown, similar to the one Trump faces in the aftermath of his move earlier this week to fire Lisa Cook from the board of the Federal Reserve. Trump, since his return to office in January, has acted on several occasions to remove members from boards and regulatory agencies and replace them with people seen as loyal to his agenda. Ironically, it was Trump who appointed Primus, a Democrat, to the STB in 2020. His apparent ouster means there are now two Republicans and only one Democrat on the board, which can have up to five members. The Sheet Metal, Air, Rail and Transportation (SMART), the largest rail labor union, criticized the firing. SMART-TD, the transportation division covering rail engineers, has come out against UP’s acquisition of NS. “This action is unprecedented, unlawful in spirit, and reeks of direct interference from hedge funds and the nation’s largest rail carriers,” the union said in a statement Thursday. “The timing of this move cannot be ignored. Prior to its submission to the board, Mr. Primus has made clear his opposition to the so-called ‘merger’ that would be a corporate takeover combining Union Pacific Railroad and Norfolk Southern Railroad.” Voted against CP-KCS deal Primus has been vocal in his opposition to consolidation in the rail industry, voting against the Canadian Pacific-Kansas City Southern merger in 2023 and Canadian National Railway’s acquisition of Iowa Northern Railway earlier this year. Removing him from the STB would seem to give the UP-NS deal a far easier avenue to gain the required approval from federal regulators. “We believe the move comes in an effort to clear the path for the potential transcontinental merger,” Jason Seidl, a transportation analyst with TD Securities, wrote in an investor’s note Thursday. “We believe a Republican appointment could still be forthcoming as channel checks indicated four candidates in contention, potentially leaving the [STB] with a 3-1 Republican majority by the time a decision has to be made.” By law, no single political party can have more than three out of the five available seats on the Surface Transportation Board. Chairman Patrick Fuchs and member Michelle Schultz are Republicans, while member Karen Hedlund is a Democrat. There is already an existing vacancy on the board. UP and NS will file their formal merger application by January, kicking off an STB review that would likely not result in a final vote until the spring of 2027, if not later. Contact Ari Ashe at ari.ashe@spglobal.com .

North-American rail

Rail News

Trump move to oust STB’s Primus boosts likelihood of UP-NS approval

<div class="phx-topic abstract-wrapper">The Chinese state-controlled carrier said in an interim earnings statement the industry experienced a volatile first half of 2025 due to “tariff swings and lingering geopolitical tensions.”</div>

The Chinese state-controlled carrier said in an interim earnings statement the industry experienced a volatile first half of 2025 due to “tariff swings and lingering geopolitical tensions.”

<div class="phx-topic">Container shipping is undergoing an unprecedented transformation as economic and trade policies, geopolitical issues, technological innovation and ecological demands reshape the industry’s competitive landscape, Cosco Shipping Holdings said Thursday. The Chinese state-controlled carrier said in an interim earnings statement the industry experienced a volatile first half of 2025 due to “tariff swings and lingering geopolitical tensions, creating a generally complex and ever-changing situation.” The carrier launched a raft of new services between China and emerging markets to help offset the impact of fast-changing US tariff polices. These included three mainline and three feeder services that better connected China and the West Coast of South America utilizing Cosco’s hub port at Chancay, Peru, plus new routes connecting Southeast and South Asia with its Yangpu hub port following the launch of the Hainan free trade zone in Southwest China. The focus on emerging trades helped drive double-digit growth in revenue and liftings from those regions compared with more modest results from trans-Pacific, Asia-Europe and Asia-Mediterranean services. Group figures, which comprise Cosco Shipping Lines and its Hong Kong-headquartered affiliate OOCL, show overall net profit increased 4% to $2.5 billion in the first half, while revenues rose 7% to $15 billion. That included an $819 million revenue contribution from Cosco Shipping Ports that was 15% higher than the first six months of 2024. Total throughput at the group’s domestic and international terminals increased 6% to 74 million TEUs. Reflecting the lackluster performance on the trans-Pacific, revenues on that trade edged up 1% to almost $4 billion in the first six months, while liftings were up 5% to 2.4 million TEUs. Cosco confirmed it has a vessel order backlog totaling 910,000 TEUs, including 42 methanol dual-fuel-powered vessels with a total capacity of 780,000 TEUs. The carrier also intends to retrofit a series of existing vessels with methanol-powered systems, but did not say how many container ships would be upgraded. Contact Keith Wallis at <a href="https://www.joc.com/article/keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Container shipping is undergoing an unprecedented transformation as economic and trade policies, geopolitical issues, technological innovation and ecological demands reshape the industry’s competitive landscape, Cosco Shipping Holdings said Thursday. The Chinese state-controlled carrier said in an interim earnings statement the industry experienced a volatile first half of 2025 due to “tariff swings and lingering geopolitical tensions, creating a generally complex and ever-changing situation.” The carrier launched a raft of new services between China and emerging markets to help offset the impact of fast-changing US tariff polices. These included three mainline and three feeder services that better connected China and the West Coast of South America utilizing Cosco’s hub port at Chancay, Peru, plus new routes connecting Southeast and South Asia with its Yangpu hub port following the launch of the Hainan free trade zone in Southwest China. The focus on emerging trades helped drive double-digit growth in revenue and liftings from those regions compared with more modest results from trans-Pacific, Asia-Europe and Asia-Mediterranean services. Group figures, which comprise Cosco Shipping Lines and its Hong Kong-headquartered affiliate OOCL, show overall net profit increased 4% to $2.5 billion in the first half, while revenues rose 7% to $15 billion. That included an $819 million revenue contribution from Cosco Shipping Ports that was 15% higher than the first six months of 2024. Total throughput at the group’s domestic and international terminals increased 6% to 74 million TEUs. Reflecting the lackluster performance on the trans-Pacific, revenues on that trade edged up 1% to almost $4 billion in the first six months, while liftings were up 5% to 2.4 million TEUs. Cosco confirmed it has a vessel order backlog totaling 910,000 TEUs, including 42 methanol dual-fuel-powered vessels with a total capacity of 780,000 TEUs. The carrier also intends to retrofit a series of existing vessels with methanol-powered systems, but did not say how many container ships would be upgraded. Contact Keith Wallis at keithwallis@hotmail.com .

Container Shipping News

Cosco H1 net profit ticks 4% higher amid ‘complex’ container shipping market

<div class="phx-topic abstract-wrapper">The opening of the first phase of the port’s new on-dock rail yard will be delayed until next year, while the project faces a 42% increase in budgeted costs. </div>

The opening of the first phase of the port’s new on-dock rail yard will be delayed until next year, while the project faces a 42% increase in budgeted costs.

<div class="phx-topic">The opening of a major project to add on-dock rail to the Port of Charleston is delayed about six months and will only handle CSX Transportation trains initially due to design changes requested by Norfolk Southern Railway (NS). Inflation, redesigns, stalled permits, missed grants and even port crane tariffs have resulted in $232 million of cost overruns, making the project’s troubles a likely factor in the port’s chief executive recently resigning.<a href="https://www.joc.com/article/charleston-moves-ahead-with-plans-for-near-dock-intermodal-facility-5194359">The Navy Base Intermodal Facility</a> was originally budgeted at about $550 million. The brownfield development, adjacent to Charleston’s Hugh K. Leatherman terminal, is designed for handling 1 million container lifts per year and aimed <a href="https://www.joc.com/article/sc-ports-chief-outlines-plans-for-charleston-to-hit-10-million-teu-mark-5749894">to build upon Charleston’s development of inland ports at Greer and Dillon, South Carolina.</a>Since its original proposal in 2021, cost estimates have risen to $782 million, now-former South Carolina State Ports Authority (SC Ports) Chief Executive Barbara Melvin told a state legislative committee in July. South Carolina appropriated $550 million over 2021 and 2022 for the project. “We are seeing challenges in materials, labor and equipment to build these types of projects,” Melvin told the committee. “All of those have escalated over the last three years of this project.” The Navy Base project, which includes a barge service for moving containers to and from Charleson’s Wando Welch Terminal for rail service, was expected to open this summer. The rail yard will now open in January 2026, with some features not yet ready until 2027. Melvin, who was the port’s chief operating officer before becoming chief executive, announced <a href="https://www.joc.com/article/melvin-steps-down-as-sc-ports-chief-6067001">her resignation from SC Ports last week</a>, without citing a reason. South Carolina State Sen. Sean Bennett, one of the members of the fiscal oversight committee briefed on the project, said in a statement Thursday to the Journal of Commerce the rail yard “remains viable and essential, but the execution has clearly fallen short.”“Cost overruns can’t simply be dismissed as inflation — they reflect deeper issues,” Bennett said. “The Port Authority’s board must step up its responsibilities and provide the leadership and accountability this project requires.” SC Ports said in a statement to the Journal of Commerce it is still moving forward with the project as originally envisioned. Most of the yard’s construction is complete and its six gantry cranes have been installed. Cost overages for the remaining parts of the project are now part of the port’s 2026 capital plan. “This project will boost SC Ports’ already robust intermodal connectivity between the Port of Charleston and inland port markets in the Southeast and beyond,” SC Ports said in the statement. <h3>NS needs more access</h3>The rail yard itself, originally budgeted at about $400 million in 2021, is now expected to cost $544 million. Improvements to Charleston’s two terminals for barge service, originally budgeted at $150 million, have since increased to $237 million. Across all those, SC Ports faces higher material and labor costs, Melvin told the committee, adding that Leatherman terminal improvement costs have risen 44% since its initial construction in 2019, while nationwide warehouse and concrete construction costs have increased at rates of 25% and 32%, respectively, between 2021 and 2023.Construction costs on the rail yard itself, a former naval base, have also risen due to unexpectedly soft soil, environmental remediation and unforeseen buried infrastructure. Key features of the project will also not be ready in time for the January opening. A one-mile dedicated drayage road between the rail yard and the Leatherman terminal was redesigned after SC Ports did a land swap with a nearby US Coast Guard base. Until that road opens in November 2026, containers will be drayed on 2.5 miles of another industrial road near the port.Some 80,000 feet of rail track connecting to the rail yard from the south to CSX and NS’s main tracks also won’t be fully ready until March 2027, Melvin said, citing the extensive design challenges involving both railroads and various public entities. The tracks have eight street-level crossings through North Charleston. A construction award for the trackage is expected this October. “The southern connection has been the most challenging piece of the project,” Melvin told the committee, adding that steel tariffs will also raise its cost. Until the southern connection opens, only CSX will be able to access the rail yard through its north tracks. In addition to the south access, NS needs four miles of siding for passing trains, the railroad unexpectedly informed SC Ports this summer, Melvin said. The siding is expected to cost about $28 million and was originally thought to be part of NS’ own capital plans, she said. NS said in a statement to the Journal of Commerce that it has informed SC Ports for the last decade about what it needs to utilize the site, specifically “tracks leading into the facility as well as construction of a passing siding in North Charleston.” “We remain committed to the success of the Navy Base intermodal facility and to collaborating to get this facility online as quickly as possible,” NS said. Melvin told the state senate committee she expects NS could use the facility as early as October 2026 when the first phase of the southern access is ready. <h3>Tariff hit on cranes</h3>For barges, SC Ports planned to build a 700-foot berth extension at Wando Welch. But since applying for a permit in 2018 and after four follow-ups, the US Army Corps of Engineers has yet to issue a permit for the berth, Melvin said. She said the berth hoped to win some $45 million in federal grants applied for under the Biden administration, but did not receive the funding. Melvin told the state senate committee SC Ports expects Wando’s barge berth could cost $76 million, “if we can get a permit quickly and proceed, but if we cannot, that price won’t hold.” “We could still operate a barge [at Wando’s existing berths], but it’s not ideal,” she said. <a href="https://www.joc.com/article/charlestons-leatherman-terminal-eyes-second-berth-by-late-2026-6066963">The Leatherman terminal’s plans to build another 1,600 feet of berth</a> will allow it to handle a barge along with an additional container ship, Melvin said. However, the original plan only called for adding half that length. Melvin said that given the overall cost increases, SC Ports decided to move ahead with a full extension, adding $53 million to Leatherman’s budget. SC Ports originally budgeted $25 million to purchase ZPMC cranes for the Leatherman extension. But due to <a href="https://www.joc.com/article/looming-us-tariffs-put-economic-viability-of-sts-cranes-in-doubt-6055678">the Trump administration’s proposed tariffs on Chinese-made cranes</a>, Melvin said SC Ports increased its crane budget to $34 million based on estimates from four non-Chinese crane makers, but the price could increase further.“You are paying a premium to order non-Chinese cranes,” Melvin said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The opening of a major project to add on-dock rail to the Port of Charleston is delayed about six months and will only handle CSX Transportation trains initially due to design changes requested by Norfolk Southern Railway (NS). Inflation, redesigns, stalled permits, missed grants and even port crane tariffs have resulted in $232 million of cost overruns, making the project’s troubles a likely factor in the port’s chief executive recently resigning. The Navy Base Intermodal Facility was originally budgeted at about $550 million. The brownfield development, adjacent to Charleston’s Hugh K. Leatherman terminal, is designed for handling 1 million container lifts per year and aimed to build upon Charleston’s development of inland ports at Greer and Dillon, South Carolina. Since its original proposal in 2021, cost estimates have risen to $782 million, now-former South Carolina State Ports Authority (SC Ports) Chief Executive Barbara Melvin told a state legislative committee in July. South Carolina appropriated $550 million over 2021 and 2022 for the project. “We are seeing challenges in materials, labor and equipment to build these types of projects,” Melvin told the committee. “All of those have escalated over the last three years of this project.” The Navy Base project, which includes a barge service for moving containers to and from Charleson’s Wando Welch Terminal for rail service, was expected to open this summer. The rail yard will now open in January 2026, with some features not yet ready until 2027. Melvin, who was the port’s chief operating officer before becoming chief executive, announced her resignation from SC Ports last week , without citing a reason. South Carolina State Sen. Sean Bennett, one of the members of the fiscal oversight committee briefed on the project, said in a statement Thursday to the Journal of Commerce the rail yard “remains viable and essential, but the execution has clearly fallen short.” “Cost overruns can’t simply be dismissed as inflation — they reflect deeper issues,” Bennett said. “The Port Authority’s board must step up its responsibilities and provide the leadership and accountability this project requires.” SC Ports said in a statement to the Journal of Commerce it is still moving forward with the project as originally envisioned. Most of the yard’s construction is complete and its six gantry cranes have been installed. Cost overages for the remaining parts of the project are now part of the port’s 2026 capital plan. “This project will boost SC Ports’ already robust intermodal connectivity between the Port of Charleston and inland port markets in the Southeast and beyond,” SC Ports said in the statement. NS needs more access The rail yard itself, originally budgeted at about $400 million in 2021, is now expected to cost $544 million. Improvements to Charleston’s two terminals for barge service, originally budgeted at $150 million, have since increased to $237 million. Across all those, SC Ports faces higher material and labor costs, Melvin told the committee, adding that Leatherman terminal improvement costs have risen 44% since its initial construction in 2019, while nationwide warehouse and concrete construction costs have increased at rates of 25% and 32%, respectively, between 2021 and 2023. Construction costs on the rail yard itself, a former naval base, have also risen due to unexpectedly soft soil, environmental remediation and unforeseen buried infrastructure. Key features of the project will also not be ready in time for the January opening. A one-mile dedicated drayage road between the rail yard and the Leatherman terminal was redesigned after SC Ports did a land swap with a nearby US Coast Guard base. Until that road opens in November 2026, containers will be drayed on 2.5 miles of another industrial road near the port. Some 80,000 feet of rail track connecting to the rail yard from the south to CSX and NS’s main tracks also won’t be fully ready until March 2027, Melvin said, citing the extensive design challenges involving both railroads and various public entities. The tracks have eight street-level crossings through North Charleston. A construction award for the trackage is expected this October. “The southern connection has been the most challenging piece of the project,” Melvin told the committee, adding that steel tariffs will also raise its cost. Until the southern connection opens, only CSX will be able to access the rail yard through its north tracks. In addition to the south access, NS needs four miles of siding for passing trains, the railroad unexpectedly informed SC Ports this summer, Melvin said. The siding is expected to cost about $28 million and was originally thought to be part of NS’ own capital plans, she said. NS said in a statement to the Journal of Commerce that it has informed SC Ports for the last decade about what it needs to utilize the site, specifically “tracks leading into the facility as well as construction of a passing siding in North Charleston.” “We remain committed to the success of the Navy Base intermodal facility and to collaborating to get this facility online as quickly as possible,” NS said. Melvin told the state senate committee she expects NS could use the facility as early as October 2026 when the first phase of the southern access is ready. Tariff hit on cranes For barges, SC Ports planned to build a 700-foot berth extension at Wando Welch. But since applying for a permit in 2018 and after four follow-ups, the US Army Corps of Engineers has yet to issue a permit for the berth, Melvin said. She said the berth hoped to win some $45 million in federal grants applied for under the Biden administration, but did not receive the funding. Melvin told the state senate committee SC Ports expects Wando’s barge berth could cost $76 million, “if we can get a permit quickly and proceed, but if we cannot, that price won’t hold.” “We could still operate a barge [at Wando’s existing berths], but it’s not ideal,” she said. The Leatherman terminal’s plans to build another 1,600 feet of berth will allow it to handle a barge along with an additional container ship, Melvin said. However, the original plan only called for adding half that length. Melvin said that given the overall cost increases, SC Ports decided to move ahead with a full extension, adding $53 million to Leatherman’s budget. SC Ports originally budgeted $25 million to purchase ZPMC cranes for the Leatherman extension. But due to the Trump administration’s proposed tariffs on Chinese-made cranes , Melvin said SC Ports increased its crane budget to $34 million based on estimates from four non-Chinese crane makers, but the price could increase further. “You are paying a premium to order non-Chinese cranes,” Melvin said. Contact Michael Angell at michael.angell@spglobal.com .

Marine terminals

Intermodal providers

Port infrastructure

Charleston’s Navy Base rail yard project faces delays, big cost overruns

<div class="phx-topic abstract-wrapper">The union claims the Virginia Port Authority is tacitly violating the new master contract’s technology clauses through its influence over the port’s main terminal employer. </div>

The union claims the Virginia Port Authority is tacitly violating the new master contract’s technology clauses through its influence over the port’s main terminal employer.

<div class="phx-topic">The International Longshoremen’s Association (ILA) is suing the Virginia Port Authority (VPA) and its chief executive, alleging they are using their control of the port’s terminal employer to violate the union’s master contract by forcing new rail crane technology on longshore workers. The lawsuit, filed Tuesday in federal court in Virginia, says the VPA and Chief Executive Stephen Edwards leveraged Virginia International Terminals (VIT) — the port’s separate legal entity that handles daily operations and directly employs longshore workers — to implement new technology at the port without going through the process required by the master contract. The suit, which further alleges the port authority sought to influence contract talks held earlier this year and in 2024 even though it was not a party to the talks, seeks to bar the VPA and Edwards from interfering in the contractual relationship between the union and VIT. “VPA and Edwards are aware of the terms and conditions of the master contract, specifically as they relate to the specific processes, procedures and assurances for implementing new technology, as well as the workforce protections guaranteed to ILA labor,” the lawsuit reads. “Yet, despite their knowledge of the terms and conditions of the master contract, VPA and Edwards have knowingly and intentionally interfered with the contract between VIT and ILA by causing VIT to violate that contract,” the suit adds. The VPA declined comment on the lawsuit. <h3>Crane installation began in April </h3>The VPA in April began to install <a href="https://www.joc.com/article/ila-targets-rail-mounted-gantry-cranes-amid-impasse-in-port-labor-talks-5874742">semi-automated rail-mounted gantry cranes</a> on the north berth of Norfolk International Terminals, the suit said. The ILA claims that VIT, as the signatory to the master contract and the actual employer at the terminal, did not notify the union about the new rail cranes being installed. Under the ILA master contract ratified this past March, any new technology implemented by ports along the East and Gulf coasts must be vetted by a new technology committee comprised of the union and maritime employers to determine staffing levels for the new equipment, training and pay rates. The local union must also be notified so it can negotiate with employers about the new technology. However, the ILA alleges that VIT did not follow this process. Instead, “VIT said that the cranes had been purchased by VPA, not VIT.” VIT said that because VPA is not a party to the master contract, it did not have to inform the union about the new technology, the suit claims. The ILA said it only undertook the lawsuit after filing multiple grievances under the master contract. “Thus, VPA is using its authority to frustrate the collective bargaining process and interfere with the master contract relationship between ILA and VIT,” the lawsuit reads. Even before the new cranes arrived, the ILA alleges that Edwards and the VPA were seeking to influence the contract talks, claiming that VIT “argued vociferously against more stringent workforce protections for ILA labor related to the implementation of new technology.” “VIT’s argument during contract negotiations in favor of automating and against workforce protection was at the behest of defendants VPA, in general, and defendant Edwards, in particular,” the suit alleges. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The International Longshoremen’s Association (ILA) is suing the Virginia Port Authority (VPA) and its chief executive, alleging they are using their control of the port’s terminal employer to violate the union’s master contract by forcing new rail crane technology on longshore workers. The lawsuit, filed Tuesday in federal court in Virginia, says the VPA and Chief Executive Stephen Edwards leveraged Virginia International Terminals (VIT) — the port’s separate legal entity that handles daily operations and directly employs longshore workers — to implement new technology at the port without going through the process required by the master contract. The suit, which further alleges the port authority sought to influence contract talks held earlier this year and in 2024 even though it was not a party to the talks, seeks to bar the VPA and Edwards from interfering in the contractual relationship between the union and VIT. “VPA and Edwards are aware of the terms and conditions of the master contract, specifically as they relate to the specific processes, procedures and assurances for implementing new technology, as well as the workforce protections guaranteed to ILA labor,” the lawsuit reads. “Yet, despite their knowledge of the terms and conditions of the master contract, VPA and Edwards have knowingly and intentionally interfered with the contract between VIT and ILA by causing VIT to violate that contract,” the suit adds. The VPA declined comment on the lawsuit. Crane installation began in April The VPA in April began to install semi-automated rail-mounted gantry cranes on the north berth of Norfolk International Terminals, the suit said. The ILA claims that VIT, as the signatory to the master contract and the actual employer at the terminal, did not notify the union about the new rail cranes being installed. Under the ILA master contract ratified this past March, any new technology implemented by ports along the East and Gulf coasts must be vetted by a new technology committee comprised of the union and maritime employers to determine staffing levels for the new equipment, training and pay rates. The local union must also be notified so it can negotiate with employers about the new technology. However, the ILA alleges that VIT did not follow this process. Instead, “VIT said that the cranes had been purchased by VPA, not VIT.” VIT said that because VPA is not a party to the master contract, it did not have to inform the union about the new technology, the suit claims. The ILA said it only undertook the lawsuit after filing multiple grievances under the master contract. “Thus, VPA is using its authority to frustrate the collective bargaining process and interfere with the master contract relationship between ILA and VIT,” the lawsuit reads. Even before the new cranes arrived, the ILA alleges that Edwards and the VPA were seeking to influence the contract talks, claiming that VIT “argued vociferously against more stringent workforce protections for ILA labor related to the implementation of new technology.” “VIT’s argument during contract negotiations in favor of automating and against workforce protection was at the behest of defendants VPA, in general, and defendant Edwards, in particular,” the suit alleges. Contact Michael Angell at michael.angell@spglobal.com .

Longshore labor

ILA suing Virginia port, chief executive over rollout of new rail cranes

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At SSA Marine Mexico, we firmly believe that business development must go hand in hand with social and environmental well-being. Our vision is not solely focused on operating efficiently, but also on creating a meaningful and positive impact in the communities where we are present. Since 1995, we have reaffirmed this commitment through tangible actions that reflect our core values of responsibility, solidarity, and sustainability. <span class="joc_admin__inline-image joc_admin__inline-image-aspect-ratio-3_2 joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left" data-figure-aspect-ratio="3:2"><img src="/content-assets/1752584535914_Photo%201.jpg" alt="" class="joc_admin__inline-image-inherit"> A Year of Major Achievements Over the past year, we allocated more than $107,000 USD to the implementation of 60 social and environmental projects, positively impacting over 7,800 people across various regions of Mexico. Each initiative was designed with a holistic approach, addressing key areas that contribute to long-term community development. Education: Laying the Foundation for the Future Education is one of the most powerful tools to promote social mobility and equitable development. At SSA Marine Mexico, we support academic initiatives that inspire and empower the next generation of leaders. One of our most impactful partnerships was with the University of Colima, where we sponsored the “Reto Camp” program. This initiative encourages university students to develop innovative solutions in the fields of sustainability, logistics, and port operations, offering them mentorship, tools, and real-world challenges to solve. In addition, we donated microscopes, school supplies, and educational materials to institutions in underserved communities, helping to improve the learning environment and provide students with the resources they need to succeed. Health and Sports: Promoting Wellness We believe that healthy communities are strong communities. We have supported several local sporting events and provided direct assistance to talented athletes, enabling them to pursue their passions and represent their regions with pride. Beyond sports, we also strengthened our collaboration with critical emergency response organizations such as the Mexican Red Cross and Civil Protection. Our contributions helped enhance their readiness and capabilities in times of crisis, ensuring better outcomes for those affected by emergencies. Supporting Vulnerable Groups: Reaching Those Who Need It Most A core part of our social responsibility efforts is directed toward supporting vulnerable populations. We have contributed to a range of initiatives focused on children, migrants, and at-risk families. These efforts included donations to orphanages and shelters, as well as support for the National Institute of Migration and grassroots organizations dedicated to protecting and empowering people facing adversity. By standing with those in need, we reinforce our commitment to inclusion and social justice, values that are central to our identity as a responsible company. <span class="joc_admin__inline-image joc_admin__inline-image-aspect-ratio-3_2 joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left" data-figure-aspect-ratio="3:2"><img src="/content-assets/1752584944645_Photo%202.png" alt="" class="joc_admin__inline-image-inherit">Culture: Strengthening Community Identity Cultural identity is a key element in building resilient and united communities. At SSA Marine Mexico, we actively participate in the organization and sponsorship of cultural events that celebrate local traditions and foster civic pride. Working alongside port authorities and municipal governments, we helped bring music, art, and heritage to the forefront, creating spaces for community engagement and intercultural dialogue. Environment: Investing in the Planet Our commitment to sustainability goes beyond operations—it’s a philosophy that drives every decision we make. We have partnered with environmental institutions to carry out reforestation campaigns, beach cleanups, and conservation efforts. In collaboration with the Institute for the Environment, we supported initiatives aimed at decarbonization, biodiversity protection, and environmental education. By involving our employees and local volunteers in these actions, we also foster a culture of environmental stewardship throughout our organization and our surrounding communities. Innovation for a Sustainable Future Sustainability is not just about doing good—it’s also about doing things better. In 2024, we invested $22 million USD in the acquisition of 11 state-of-the-art E-RTG cranes. These electric rubber-tired gantry cranes represent a significant technological advancement in port equipment. Seven of them are already operating on clean electric energy, resulting in a reduction of nearly 4,000 tons of CO₂ emissions and improving operational efficiency by 7%. The remaining four cranes are fully compatible with future electrification, underscoring our long-term strategy to modernize our operations in an environmentally responsible way. This investment is part of a broader innovation roadmap that includes digitalization, automation, and cleaner energy sources—all designed to ensure that our ports continue to grow without compromising the health of our planet. Building a Better Tomorrow, Together At SSA Marine Mexico, we understand that sustainability is a shared and ongoing responsibility. True impact requires collaboration across sectors, long-term vision, and unwavering commitment. That is why we continue to work hand-in-hand with local authorities, non-profit organizations, universities, and our own employees to create solutions that are both scalable and sustainable. Our journey is far from over. In the years ahead, we will continue to deepen our community engagement, explore cleaner technologies, and strengthen the social fabric of the regions where we operate. Each initiative, no matter the size, is a step toward building a future where business success goes hand-in-hand with human and environmental prosperity. We are proud of what we have achieved in 2024, but we are even more excited about what lies ahead. SSA Marine Mexico — Moving the World, Caring for People and Planet. LINK: https://www.ssamarine.mx/

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SSA Marine Mexico: True Commitment to Sustainability

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