<div class="phx-topic abstract-wrapper">As crude oil futures took a steep dive last week, the price of diesel responded quickly, falling 2.1 cents to $2.601 per gallon on average, according to the U.S.</div>

As crude oil futures took a steep dive last week, the price of diesel responded quickly, falling 2.1 cents to $2.601 per gallon on average, according to the U.S.

<div>As crude oil futures took a steep dive last week, the price of diesel responded quickly, falling 2.1 cents to $2.601 per gallon on average, according to the U.S. Energy Information Administration.Crude oil slipped 8.4 percent in a single week to $66.02 per barrel Friday on the New York Mercantile Exchange. The decline was partly due to growing inventories and slack demand.Retailers took the opportunity to attract customers with lower prices in every region. The steepest decline was where prices were, and still are, the highest. In California, diesel fell 2 cents to $2.807 per gallon; in the West Coast...

As crude oil futures took a steep dive last week, the price of diesel responded quickly, falling 2.1 cents to $2.601 per gallon on average, according to the U.S. Energy Information Administration. Crude oil slipped 8.4 percent in a single week to $66.02 per barrel Friday on the New York Mercantile Exchange. The decline was partly due to growing inventories and slack demand. Retailers took the opportunity to attract customers with lower prices in every region. The steepest decline was where prices were, and still are, the highest. In California, diesel fell 2 cents to $2.807 per gallon; in the West Coast region as a whole, diesel dived 4.1 cents but was still selling at $2.742 per gallon. The smallest change was a 1.3 cent drop in the Midwest to $2.585 per gallon. The Gulf Coast maintained the lowest prices in the country with diesel falling 1.7 cents to $2.525 per gallon. Contact Thomas L. Gallagher at tgallagher@joc.com .

Trucking News

Diesel Falls 2.1 Cents to $2.601 per Gallon

<div class="phx-topic abstract-wrapper">Along with funding through 2029, the reauthorization codified new responsibilities for the agency under OSRA-22.</div>

Along with funding through 2029, the reauthorization codified new responsibilities for the agency under OSRA-22.

Feature image

<div class="phx-topic">Congress has reauthorized the Federal Maritime Commission (FMC) for another four years while adding new powers to the agency for monitoring shipping exchanges and non-US ocean carriers. The House of Representatives voted Monday to fund the FMC through 2029, with the agency’s annual budget set to rise from $49.2 million currently to $57 million over the next four years. Along with the funding, the reauthorization codified new responsibilities for the FMC under the Ocean Shipping Reform Act of 2022 (OSRA-22). The bill now goes to the Senate, but there is no timeline for when it will vote. Among the changes in the reauthorization is a broader definition of a “controlled carrier,” which is subject to more oversight by the FMC. Along with a foreign government having a direct stake or oversight, a controlled carrier can now also be one that is domiciled in a foreign country subject to monitoring by the Department of Commerce or the US Trade Representative. Also part of the FMC’s reauthorization is a requirement that the agency’s annual report to Congress include an “analysis of any trade imbalance” that is the result of ocean carrier business practices. The FMC will also be empowered to investigate complaints against shipping exchanges. In a statement about the agency’s reauthorization, Rep. John Garamendi, one of the bill’s co-sponsors, singled out the Shanghai Shipping Exchange for the FMC’s new purview. By 2027, the FMC will also have to set out rules for registering and regulating shipping exchanges in the US. The agency will also be given one year for proposed rulemaking on how to develop containerized freight indices for shippers. The agency will continue to receive outside help in monitoring the industry. Along with reauthorizing the National Shipper Advisory Committee, Congress also authorized the FMC to establish a port advisory committee and an ocean carrier advisory committee. “This legislation builds on my Ocean Shipping Reform Act to deliver critical investments through 2027, strengthen the Commission’s independence, and ensure US businesses will compete on a fair and level playing field,” Garamendi said in the statement. Contact Michael Angell at <a href="mailto: michael.angell@spglobal.com">michael.angell@spglobal.com</a> </div>

Congress has reauthorized the Federal Maritime Commission (FMC) for another four years while adding new powers to the agency for monitoring shipping exchanges and non-US ocean carriers. The House of Representatives voted Monday to fund the FMC through 2029, with the agency’s annual budget set to rise from $49.2 million currently to $57 million over the next four years. Along with the funding, the reauthorization codified new responsibilities for the FMC under the Ocean Shipping Reform Act of 2022 (OSRA-22). The bill now goes to the Senate, but there is no timeline for when it will vote. Among the changes in the reauthorization is a broader definition of a “controlled carrier,” which is subject to more oversight by the FMC. Along with a foreign government having a direct stake or oversight, a controlled carrier can now also be one that is domiciled in a foreign country subject to monitoring by the Department of Commerce or the US Trade Representative. Also part of the FMC’s reauthorization is a requirement that the agency’s annual report to Congress include an “analysis of any trade imbalance” that is the result of ocean carrier business practices. The FMC will also be empowered to investigate complaints against shipping exchanges. In a statement about the agency’s reauthorization, Rep. John Garamendi, one of the bill’s co-sponsors, singled out the Shanghai Shipping Exchange for the FMC’s new purview. By 2027, the FMC will also have to set out rules for registering and regulating shipping exchanges in the US. The agency will also be given one year for proposed rulemaking on how to develop containerized freight indices for shippers. The agency will continue to receive outside help in monitoring the industry. Along with reauthorizing the National Shipper Advisory Committee, Congress also authorized the FMC to establish a port advisory committee and an ocean carrier advisory committee. “This legislation builds on my Ocean Shipping Reform Act to deliver critical investments through 2027, strengthen the Commission’s independence, and ensure US businesses will compete on a fair and level playing field,” Garamendi said in the statement. Contact Michael Angell at michael.angell@spglobal.com

Container lines

North American ports

Transport, Trade and Regulation News

House reauthorizes FMC and adds to its oversight powers

<div class="phx-topic abstract-wrapper">The handling and transportation of space components is opening up new opportunities for project cargo forwarders. </div>

The handling and transportation of space components is opening up new opportunities for project cargo forwarders.

<div class="phx-topic">Project cargo and breakbulk shipping company/forwarder Compagnie Maritime Nantaise (MN) has drawn up plans for a newbuild vessel designed specifically to meet the needs of the burgeoning space logistics project cargo sector. Part of the Sogestran group, MN’s fleet includes the MN Toucan and MN Colibri, built in 1995 and 2000, respectively, and designed in cooperation with the European Space Agency (ESA) Arianespace program, for which MN managed vessel operations over four decades. Those dedicated vessels for space-related cargoes have carried the Euclid telescope from Savona, Italy, to Port Canaveral; the largest European geostationary satellite from Fos in France to Kourou, French Guiana; and the James Webb telescope from Seal Beach, California to Kourou. “The MN Toucan and MN Colibri are older vessels but very well maintained,” Mathias Audrain, MN’s commercial and business development manager, told the Journal of Commerce. “However, 2026 will see a new vessel order which will meet full space industry requirements, to carry all kinds of launchers and satellites.” The vessel will be specifically designed for the space industry and could be joined by a second order in 2026. “We must have two vessels because delays are not permitted in this industry,” Audrain said, adding the first vessel could be ready in less than three years. Despite its promised sophistication, the ship will be restricted to a maximum length of 120 meters to access Kourou port in French Guiana and other small ports. “Access to Kourou is tricky, via a narrow river, so we are limited on length,” Audrain said. “The main characteristics will be close to our present vessels, which cross the Atlantic with a five-meter draft but then we are able to de-ballast when we arrive, reducing draft to three meters in order to reach the Kourou pier.” <h3>Dealing with bureaucracy </h3>Modules and components transported for space range from overweight, oversize rocket sections and launchers to tiny, fragile and temperature-sensitive items – and yet geopolitics and bureaucracy, rather than the cargo itself, are said to present some of the toughest and most complex headaches for logistics specialists. Craig Russell, project manager at freight forwarder Pinnacle International Freight in the UK, described handling and shipping as the “relatively easy part.” He said the main challenges are geopolitical. “How do you move technologically sensitive components that could be under export controls, or how do you support cross-border collaborations with customs?” he said. Britain’s exit from the European Union has added to the complexities for shipments between the UK and EU, and the trade and tariff disputes set off by the Trump administration have also had their impact, along with ever-changing sanctions regimes. Pinnacle has an office at Space Park Leicester, a UK hub for space research located within the East Midlands Freeport. Russell believes there are massive opportunities ahead for project cargo logistics as space operations continue to soar. Freeport status could open opportunities for manufacturing, consolidating and assembling satellites and other products for export, but only if managed correctly. “This is a case of the [UK] government going top level down, putting these freeports in but without the practical support of how applying and managing a customs bonded facility works,” Russell said. Conversely, the US used to be relatively easy to navigate for space logistics because many products were duty free and could move in and out freely. Now, duties, temporary import bonds and other procedures make the process more complicated. Plus, geopolitical factors mean that trade partners for products and services change frequently. “In short, it is the procedural and compliance side rather than the practical that is raising the challenges,” Russell said. Security is tight and confidentiality is essential in this sector – and there is no room for error, he added. “Transporting space components is complex and planning can start several months – even years – before just one transport,” Russell said. “Everything must go smoothly – it is not during the operation that you should discover any issues. It’s a case of check, check and triple check.” Contact Felicity Landon at <a href="mailto:felicity@felicitylandon.com">felicity@felicitylandon.com.</a></div>

Project cargo and breakbulk shipping company/forwarder Compagnie Maritime Nantaise (MN) has drawn up plans for a newbuild vessel designed specifically to meet the needs of the burgeoning space logistics project cargo sector. Part of the Sogestran group, MN’s fleet includes the MN Toucan and MN Colibri, built in 1995 and 2000, respectively, and designed in cooperation with the European Space Agency (ESA) Arianespace program, for which MN managed vessel operations over four decades. Those dedicated vessels for space-related cargoes have carried the Euclid telescope from Savona, Italy, to Port Canaveral; the largest European geostationary satellite from Fos in France to Kourou, French Guiana; and the James Webb telescope from Seal Beach, California to Kourou. “The MN Toucan and MN Colibri are older vessels but very well maintained,” Mathias Audrain, MN’s commercial and business development manager, told the Journal of Commerce. “However, 2026 will see a new vessel order which will meet full space industry requirements, to carry all kinds of launchers and satellites.” The vessel will be specifically designed for the space industry and could be joined by a second order in 2026. “We must have two vessels because delays are not permitted in this industry,” Audrain said, adding the first vessel could be ready in less than three years. Despite its promised sophistication, the ship will be restricted to a maximum length of 120 meters to access Kourou port in French Guiana and other small ports. “Access to Kourou is tricky, via a narrow river, so we are limited on length,” Audrain said. “The main characteristics will be close to our present vessels, which cross the Atlantic with a five-meter draft but then we are able to de-ballast when we arrive, reducing draft to three meters in order to reach the Kourou pier.” Dealing with bureaucracy Modules and components transported for space range from overweight, oversize rocket sections and launchers to tiny, fragile and temperature-sensitive items – and yet geopolitics and bureaucracy, rather than the cargo itself, are said to present some of the toughest and most complex headaches for logistics specialists. Craig Russell, project manager at freight forwarder Pinnacle International Freight in the UK, described handling and shipping as the “relatively easy part.” He said the main challenges are geopolitical. “How do you move technologically sensitive components that could be under export controls, or how do you support cross-border collaborations with customs?” he said. Britain’s exit from the European Union has added to the complexities for shipments between the UK and EU, and the trade and tariff disputes set off by the Trump administration have also had their impact, along with ever-changing sanctions regimes. Pinnacle has an office at Space Park Leicester, a UK hub for space research located within the East Midlands Freeport. Russell believes there are massive opportunities ahead for project cargo logistics as space operations continue to soar. Freeport status could open opportunities for manufacturing, consolidating and assembling satellites and other products for export, but only if managed correctly. “This is a case of the [UK] government going top level down, putting these freeports in but without the practical support of how applying and managing a customs bonded facility works,” Russell said. Conversely, the US used to be relatively easy to navigate for space logistics because many products were duty free and could move in and out freely. Now, duties, temporary import bonds and other procedures make the process more complicated. Plus, geopolitical factors mean that trade partners for products and services change frequently. “In short, it is the procedural and compliance side rather than the practical that is raising the challenges,” Russell said. Security is tight and confidentiality is essential in this sector – and there is no room for error, he added. “Transporting space components is complex and planning can start several months – even years – before just one transport,” Russell said. “Everything must go smoothly – it is not during the operation that you should discover any issues. It’s a case of check, check and triple check.” Contact Felicity Landon at felicity@felicitylandon.com.

Project cargo

Breakbulk News

Maritime

Space logistics newbuilding to service booming project cargo sector

<div class="phx-topic abstract-wrapper">The vessels take the carrier’s total order book to 36 ships to be delivered between 2026 and 2030, increasing its owned fleet to 150 ships totaling 927,250 TEUs.</div>

The vessels take the carrier’s total order book to 36 ships to be delivered between 2026 and 2030, increasing its owned fleet to 150 ships totaling 927,250 TEUs.

<div class="phx-topic">Taiwan's Wan Hai Lines will bolster its owned vessel fleet after approving a deal Tuesday worth almost $500 million for six 6,000-TEU dual-fuel LNG-powered container ships. Wan Hai, ranked 11th in the world in terms of capacity by Alphaliner, said the ships will be built by China's CSSC Huangpu Wenchong Shipbuilding. The vessels are priced between $75.2 million and $82 million each, giving the deal a total value of $451.2 million to $492 million, the carrier said in a Taiwan stock exchange filing. The vessels take Wan Hai's total order book to 36 ships to be delivered between 2026 and 2030, increasing its owned fleet to 150 ships totaling 927,250 TEUs. Its order book includes 12 16,000-TEU ships that will be the largest in Wan Hai’s fleet when they are delivered in 2027 and 2028. Wan Hai gave no details of where the new 6,000-TEU ships will be deployed, although they could join the carrier’s existing 600-series vessels on services between Asia and the Indian sub-continent. The ships further reinforce liquefied natural gas (LNG) as the next generation fuel of choice for ocean carriers, with this latest contract taking the total capacity of LNG-powered vessels on order to almost 4.2 million TEUs. That is double the 2.1 million TEUs of methanol-fueled vessels on order, according to Sea-web, a sister company of the Journal of Commerce within S&amp;P Global. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="b5f12c4e-8754-4025-849c-a8b4e06ae6f9"></dynamic-object></div>The shipbuilding order is part of a move by Wan Hai to expand its service network. In the first of these, the carrier's directors approved a $96 million deal Tuesday with Yokohama-Kawasaki International Port to lease for 20 years the Honmoku-futo D-4 Container Terminal in Japan's second-largest container port. Wan Hai will take over the terminal when CMA CGM, the current operator, moves to Honmoku’s D5 terminal by October next year. The D4 facility, with a quay length of 1,312 feet and three ship-to-shore cranes, has an annual handling capacity of 550,000 TEUs and will augment Wan Hai’s Ohi-5 terminal in Tokyo. The carrier also said it will launch a second trans-Pacific service in conjunction with Ocean Network Express in April or May of next year. The Asia-Pacific 2 loop will be an express service linking North and East China and the US West Coast. The full rotation is Qingdao – Ningbo – Los Angeles – Oakland – Qingdao. The AP2 service “will offer customers with a more comprehensive coverage between Asia and the US West Coast, delivering faster and more reliable transportation solutions to meet customer requirements,” Wan Hai said. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com.</a></div>

Taiwan's Wan Hai Lines will bolster its owned vessel fleet after approving a deal Tuesday worth almost $500 million for six 6,000-TEU dual-fuel LNG-powered container ships. Wan Hai, ranked 11th in the world in terms of capacity by Alphaliner, said the ships will be built by China's CSSC Huangpu Wenchong Shipbuilding. The vessels are priced between $75.2 million and $82 million each, giving the deal a total value of $451.2 million to $492 million, the carrier said in a Taiwan stock exchange filing. The vessels take Wan Hai's total order book to 36 ships to be delivered between 2026 and 2030, increasing its owned fleet to 150 ships totaling 927,250 TEUs. Its order book includes 12 16,000-TEU ships that will be the largest in Wan Hai’s fleet when they are delivered in 2027 and 2028. Wan Hai gave no details of where the new 6,000-TEU ships will be deployed, although they could join the carrier’s existing 600-series vessels on services between Asia and the Indian sub-continent. The ships further reinforce liquefied natural gas (LNG) as the next generation fuel of choice for ocean carriers, with this latest contract taking the total capacity of LNG-powered vessels on order to almost 4.2 million TEUs. That is double the 2.1 million TEUs of methanol-fueled vessels on order, according to Sea-web, a sister company of the Journal of Commerce within S&P Global. The shipbuilding order is part of a move by Wan Hai to expand its service network. In the first of these, the carrier's directors approved a $96 million deal Tuesday with Yokohama-Kawasaki International Port to lease for 20 years the Honmoku-futo D-4 Container Terminal in Japan's second-largest container port. Wan Hai will take over the terminal when CMA CGM, the current operator, moves to Honmoku’s D5 terminal by October next year. The D4 facility, with a quay length of 1,312 feet and three ship-to-shore cranes, has an annual handling capacity of 550,000 TEUs and will augment Wan Hai’s Ohi-5 terminal in Tokyo. The carrier also said it will launch a second trans-Pacific service in conjunction with Ocean Network Express in April or May of next year. The Asia-Pacific 2 loop will be an express service linking North and East China and the US West Coast. The full rotation is Qingdao – Ningbo – Los Angeles – Oakland – Qingdao. The AP2 service “will offer customers with a more comprehensive coverage between Asia and the US West Coast, delivering faster and more reliable transportation solutions to meet customer requirements,” Wan Hai said. Contact Keith Wallis at keithwallis@hotmail.com.

Trans-Pacific

Container Shipping News

Wan Hai inks roughly $500 million deal for six LNG-powered ships

<div class="phx-topic abstract-wrapper">Data from consultants Trade and Transport Group shows the impact of regulatory changes as  de minimis traffic fell significantly while regular air cargo increased.</div>

Data from consultants Trade and Transport Group shows the impact of regulatory changes as  de minimis traffic fell significantly while regular air cargo increased.

<div class="phx-topic">A fundamental shift in trans-Pacific air freight trade flows since the US eliminated the de minimis exemption for low-value goods in May is becoming clearer, with a decline in China-US traffic replaced by booming imports from Taiwan and Vietnam. Data from consultants Trade and Transport Group shows the impact of the regulatory changes as  de minimis traffic fell significantly while regular air cargo increased. “The decline in China to US traffic has been more than offset, particularly by air freight from Taiwan and Vietnam, and it is mainly linked to computers and parts, as well as industrial equipment,” Frederic Horst, managing director of Trade and Transport Group, told the Journal of Commerce. In the first nine months of the year, US imports of air cargo from China were down 10.1% year over year, Trade and Transport data shows. But imports from Northeast Asia as a whole rose 36.4%, while imports from Southeast Asian origins were up almost 50%.  A deeper dive into the data shows US air cargo imports from Taiwan from January through September jumped almost 91% year over year, imports from Vietnam rose almost 80% and imports from Thailand were up more than 40%. Computers and accessories, industrial equipment and parts; audio, video and optical components; and mobile phones comprised the bulk of the air freight shipments. The trend has also been picked up by Taiwan-based Dimerco Express Group, which has urged shippers to factor the supply chain changes into their 2026 shipment plans. “Following changes to US de minimis rules, some direct China-US e-commerce flows have decreased, but more cargo is now routed via alternative hubs and forward-stocking models, making trade lanes more diversified,” Catherine Chien, chairwoman of Dimerco Express Group, said in a market update.  “Demand for high-tech, AI-related and e-commerce shipments continues to drive growth in air freight from the Asia-Pacific region to North America and Europe,” Chien added. “Shippers that can flex between multiple lanes, multiple modes and multiple origin countries will be better positioned than those relying on a single country or mode.” <h3>US import data distorted by e-commerce </h3>The main driver of inbound air cargo from Asia to the US has been e-commerce, which over the past few years has created a growing gap in US air cargo data. But the removal in May of the de minimis exemption for low-value imports from China, followed by the removal of de minimis rules for all US trading partners in August, has led to a fundamental change in the mix of air cargo. “Regular air freight imports – i.e. consignments greater than $2,000 – are up 16.5% for the first nine months, while overall inbound air cargo traffic (to the US) is down 2.5%,” Horst said. Data from air cargo analyst Rotate shows freighter operators have shifted capacity in Asia to follow the moving export trend. Direct air freight capacity offered from Southeast Asia to North America from May 2 – when the de minimis tariff on China imports was eliminated – through November was up 89% at 102,700 tonnes.  <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="8d7ed0b1-01de-471d-b540-bed610465c9a"></dynamic-object></div>However, the analyst pointed out that much of Vietnam’s air freight trade is shipped indirectly through Asian hubs in mainland China, Hong Kong, South Korea and Japan, so the actual volume from Southeast Asia to North America is higher. The Freightos Air Index shows China-US rates at a 2025 high exceeding $8/kg this week, higher than last year's $7.30/kg peak, according to a market update from Freightos Tuesday.  The International Air Transport Association (IATA) expects global air volume growth of 3.1% for 2025 and 2.6% for 2026 despite the impact of the US tariffs on volume flows. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

A fundamental shift in trans-Pacific air freight trade flows since the US eliminated the de minimis exemption for low-value goods in May is becoming clearer, with a decline in China-US traffic replaced by booming imports from Taiwan and Vietnam.  Data from consultants Trade and Transport Group shows the impact of the regulatory changes as  de minimis traffic fell significantly while regular air cargo increased.  “The decline in China to US traffic has been more than offset, particularly by air freight from Taiwan and Vietnam, and it is mainly linked to computers and parts, as well as industrial equipment,” Frederic Horst, managing director of Trade and Transport Group, told the Journal of Commerce.  In the first nine months of the year, US imports of air cargo from China were down 10.1% year over year, Trade and Transport data shows. But imports from Northeast Asia as a whole rose 36.4%, while imports from Southeast Asian origins were up almost 50%.   A deeper dive into the data shows US air cargo imports from Taiwan from January through September jumped almost 91% year over year, imports from Vietnam rose almost 80% and imports from Thailand were up more than 40%. Computers and accessories, industrial equipment and parts; audio, video and optical components; and mobile phones comprised the bulk of the air freight shipments.  The trend has also been picked up by Taiwan-based Dimerco Express Group, which has urged shippers to factor the supply chain changes into their 2026 shipment plans.  “Following changes to US de minimis rules, some direct China-US e-commerce flows have decreased, but more cargo is now routed via alternative hubs and forward-stocking models, making trade lanes more diversified,” Catherine Chien, chairwoman of Dimerco Express Group, said in a market update.   “Demand for high-tech, AI-related and e-commerce shipments continues to drive growth in air freight from the Asia-Pacific region to North America and Europe,” Chien added. “Shippers that can flex between multiple lanes, multiple modes and multiple origin countries will be better positioned than those relying on a single country or mode.”  US import data distorted by e-commerce  The main driver of inbound air cargo from Asia to the US has been e-commerce, which over the past few years has created a growing gap in US air cargo data. But the removal in May of the de minimis exemption for low-value imports from China, followed by the removal of de minimis rules for all US trading partners in August, has led to a fundamental change in the mix of air cargo.  “Regular air freight imports – i.e. consignments greater than $2,000 – are up 16.5% for the first nine months, while overall inbound air cargo traffic (to the US) is down 2.5%,” Horst said.  Data from air cargo analyst Rotate shows freighter operators have shifted capacity in Asia to follow the moving export trend. Direct air freight capacity offered from Southeast Asia to North America from May 2 – when the de minimis tariff on China imports was eliminated – through November was up 89% at 102,700 tonnes.   However, the analyst pointed out that much of Vietnam’s air freight trade is shipped indirectly through Asian hubs in mainland China, Hong Kong, South Korea and Japan, so the actual volume from Southeast Asia to North America is higher.  The Freightos Air Index shows China-US rates at a 2025 high exceeding $8/kg this week, higher than last year's $7.30/kg peak, according to a market update from Freightos Tuesday.   The International Air Transport Association (IATA) expects global air volume growth of 3.1% for 2025 and 2.6% for 2026 despite the impact of the US tariffs on volume flows.  Contact Greg Knowler at  greg.knowler@spglobal.com . 

Air Cargo Forwarder News

Air Cargo

Rising US air freight imports from Taiwan, Vietnam offset drop in China trade 

<div class="phx-topic abstract-wrapper">The US Department of Transportation estimates there are about 200,000 holders of non-domiciled commercial driver’s licenses, most of whom would lose eligibility under a proposed rule that would bar certain immigrants from operating commercial vehicles.</div>

The US Department of Transportation estimates there are about 200,000 holders of non-domiciled commercial driver’s licenses, most of whom would lose eligibility under a proposed rule that would bar certain immigrants from operating commercial vehicles.

<div class="phx-topic">The trucking industry differs on how much of any impact stricter federal rules on immigrants driving in the US will have, with one side arguing that a crackdown will move the needle on subdued pricing and the other warning that only a demand rebound will end the three-year freight slump. The US Department of Transportation (USDOT) estimates there are about 200,000 holders of non-domiciled commercial driver’s licenses (CDLs), most of whom would lose eligibility under a proposed rule that would bar certain immigrants, including asylum seekers, from operating commercial vehicles. No one has confirmed the number in the Federal Motor Carrier Safety Administration’s (FMCSA’s) emergency interim rule; states issue CDLs, not the federal government. “There is a lack of clarity on where the 200,000 figure comes from in the first place,” Jason Miller, professor of supply chain management for Michigan State University, told the Journal of Commerce. Under the DOT’s proposed rule, only drivers holding H-2A, H-2B or E-2 visas would be permitted to retain non-domiciled CDLs. But the US Court of Appeals for the District of Columbia Circuit has placed the rule on hold indefinitely. Even so, some industry executives argue that enforcement activity — rather than the rule itself — could have a more immediate effect on trucking capacity. Thom Albrecht, chief revenue officer of insurer Reliance Partners, said he believes up to 15% of current US truckload capacity may be tied to illegitimate operations, including cargo theft and carriers operating outside of US rules and regulations. Albrecht emphasized that the figure is an estimate based on publicly available CDL data, not an exact count. “That doesn’t mean we have 15% excess capacity. I would suggest it’s probably 2% to 3%. It would not take a whole lot for the industry to start feeling better,” he said during a webinar last week hosted by Deutsche Bank. “There have been so many bad actors let into this industry over the last few years. That’s the single-biggest deterrent for this industry to get healthy.” Ryan Joyce, CEO of cargo security firm Genlogs, said his company found nearly 1,000 Mexican trucking companies that are legally allowed to cross the border with international freight, but also operating far beyond the permitted zone inside the US. Joyce said those carriers are engaging in cabotage — legally delivering an international load, then illegally hauling a domestic load between two US locations. “The top violator, for example, was observed hundreds of times operating as far north as Minnesota, Wisconsin, and New York,” Joyce said on the Deutsche Bank webinar. He also said the non-domiciled CDL problem is tied to cargo theft, with some unsafe carriers shutting down one day, paying cash to obtain a new motor carrier number, and then reopening the next day, often referred to as “chameleon carriers.” Albrecht and Joyce are among those who expect a swift market response as insurers and USDOT increase scrutiny of illegitimate operations. “I follow certain threads of truck drivers online, and there are discussions that a lot of these non-domiciled CDLs coming up for renewal won’t be renewed,” Albrecht said on the webinar. “A lot of them have said that post-Christmas, that’s it for them. That this is the last hurrah.” Others, however, argue that the non-domiciled CDL and cabotage crackdowns will not produce a sudden spike in trucking rates. <h3>Skepticism abounds </h3>In audits conducted of Minnesota and New York, most of the violations cited by USDOT involved otherwise properly issued non-domiciled CDLs in which the license expiration date extended beyond the driver’s employment authorization, rather than wholesale ineligibility. And even when drivers with a valid non-domiciled CDL fail an English-language proficiency exam, many continue operating once highway patrol leaves the scene. Police cannot immobilize the vehicle because it is the driver, not the truck, who is taken out of service. “The driver will just wait a little bit and once the officer leaves, he’ll just drive off as if nothing happened,” said Cliff Bates, former owner of Capital City Trucking, a trucking company that went out of business within the last two years. “Even when the driver is dropped off at the next exit, the minute the patrol leaves, he’s walking back down the highway to the truck again.” While Bates agrees that reckless driving by some non-domiciled CDL holders is a major problem, he questions how quickly the Trump administration can act. “I think they’re going to cut off the spigot for new CDLs, but I question the assumption that this administration will act swiftly with midterms coming in less than a year,” Bates told the Journal of Commerce. He said rapid enforcement could raise rates and, by extension, consumer prices. Still, broader macroeconomic factors may limit how much enforcement alone can shift the market. Slashing capacity does not address weak US manufacturing data that has softened truckload demand, according to Miller. He noted, for example, that single-family building permits have fallen 10% from last year, as of the last update before the US government shutdown, and that fracking activity isn’t going to rebound with crude oil at current prices. “There are also individuals out there with the requisite background who could re-enter the [trucking] industry rather quickly if conditions significantly improve from a pricing standpoint, which would blunt any loss of non-domiciled capacity,” Miller said. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

The trucking industry differs on how much of any impact stricter federal rules on immigrants driving in the US will have, with one side arguing that a crackdown will move the needle on subdued pricing and the other warning that only a demand rebound will end the three-year freight slump. The US Department of Transportation (USDOT) estimates there are about 200,000 holders of non-domiciled commercial driver’s licenses (CDLs), most of whom would lose eligibility under a proposed rule that would bar certain immigrants, including asylum seekers, from operating commercial vehicles. No one has confirmed the number in the Federal Motor Carrier Safety Administration’s (FMCSA’s) emergency interim rule; states issue CDLs, not the federal government. “There is a lack of clarity on where the 200,000 figure comes from in the first place,” Jason Miller, professor of supply chain management for Michigan State University, told the Journal of Commerce. Under the DOT’s proposed rule, only drivers holding H-2A, H-2B or E-2 visas would be permitted to retain non-domiciled CDLs. But the US Court of Appeals for the District of Columbia Circuit has placed the rule on hold indefinitely. Even so, some industry executives argue that enforcement activity — rather than the rule itself — could have a more immediate effect on trucking capacity. Thom Albrecht, chief revenue officer of insurer Reliance Partners, said he believes up to 15% of current US truckload capacity may be tied to illegitimate operations, including cargo theft and carriers operating outside of US rules and regulations. Albrecht emphasized that the figure is an estimate based on publicly available CDL data, not an exact count. “That doesn’t mean we have 15% excess capacity. I would suggest it’s probably 2% to 3%. It would not take a whole lot for the industry to start feeling better,” he said during a webinar last week hosted by Deutsche Bank. “There have been so many bad actors let into this industry over the last few years. That’s the single-biggest deterrent for this industry to get healthy.” Ryan Joyce, CEO of cargo security firm Genlogs, said his company found nearly 1,000 Mexican trucking companies that are legally allowed to cross the border with international freight, but also operating far beyond the permitted zone inside the US. Joyce said those carriers are engaging in cabotage — legally delivering an international load, then illegally hauling a domestic load between two US locations. “The top violator, for example, was observed hundreds of times operating as far north as Minnesota, Wisconsin, and New York,” Joyce said on the Deutsche Bank webinar. He also said the non-domiciled CDL problem is tied to cargo theft, with some unsafe carriers shutting down one day, paying cash to obtain a new motor carrier number, and then reopening the next day, often referred to as “chameleon carriers.” Albrecht and Joyce are among those who expect a swift market response as insurers and USDOT increase scrutiny of illegitimate operations. “I follow certain threads of truck drivers online, and there are discussions that a lot of these non-domiciled CDLs coming up for renewal won’t be renewed,” Albrecht said on the webinar. “A lot of them have said that post-Christmas, that’s it for them. That this is the last hurrah.” Others, however, argue that the non-domiciled CDL and cabotage crackdowns will not produce a sudden spike in trucking rates. Skepticism abounds In audits conducted of Minnesota and New York, most of the violations cited by USDOT involved otherwise properly issued non-domiciled CDLs in which the license expiration date extended beyond the driver’s employment authorization, rather than wholesale ineligibility. And even when drivers with a valid non-domiciled CDL fail an English-language proficiency exam, many continue operating once highway patrol leaves the scene. Police cannot immobilize the vehicle because it is the driver, not the truck, who is taken out of service. “The driver will just wait a little bit and once the officer leaves, he’ll just drive off as if nothing happened,” said Cliff Bates, former owner of Capital City Trucking, a trucking company that went out of business within the last two years. “Even when the driver is dropped off at the next exit, the minute the patrol leaves, he’s walking back down the highway to the truck again.” While Bates agrees that reckless driving by some non-domiciled CDL holders is a major problem, he questions how quickly the Trump administration can act. “I think they’re going to cut off the spigot for new CDLs, but I question the assumption that this administration will act swiftly with midterms coming in less than a year,” Bates told the Journal of Commerce. He said rapid enforcement could raise rates and, by extension, consumer prices. Still, broader macroeconomic factors may limit how much enforcement alone can shift the market. Slashing capacity does not address weak US manufacturing data that has softened truckload demand, according to Miller. He noted, for example, that single-family building permits have fallen 10% from last year, as of the last update before the US government shutdown, and that fracking activity isn’t going to rebound with crude oil at current prices. “There are also individuals out there with the requisite background who could re-enter the [trucking] industry rather quickly if conditions significantly improve from a pricing standpoint, which would blunt any loss of non-domiciled capacity,” Miller said. Contact Ari Ashe at ari.ashe@spglobal.com .

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