<div class="phx-topic abstract-wrapper">Is Maersk Line, the world’s largest ocean carrier, showing that the age-old demons of container shipping — overcapacity, volatile spot rates and commoditized service — can finally be slain?
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Is Maersk Line, the world’s largest ocean carrier, showing that the age-old demons of container shipping — overcapacity, volatile spot rates and commoditized service — can finally be slain?

<div>Is Maersk Line, the world’s largest ocean carrier, showing that the age-old demons of container shipping — overcapacity, volatile spot rates and commoditized service — can finally be slain?Put another way, in solidly outperforming all other carriers that publicly reported financials last year, is Maersk showing that size, scale and management can allow it to chart a different course from its many smaller competitors that, as of last year, were still for the most part mired in losses?Its results stood out last year; that much is obvious. Maersk generated EBIT of $1.57 billion in 2013 following $525 million in 2012....

Is Maersk Line, the world’s largest ocean carrier, showing that the age-old demons of container shipping — overcapacity, volatile spot rates and commoditized service — can finally be slain? Put another way, in solidly outperforming all other carriers that publicly reported financials last year, is Maersk showing that size, scale and management can allow it to chart a different course from its many smaller competitors that, as of last year, were still for the most part mired in losses? Its results stood out last year; that much is obvious. Maersk generated EBIT of $1.57 billion in 2013 following $525 million in 2012. It posted an operating margin of 5.8 percent last year, the highest of 19 carriers reviewed by Alphaliner. With the two largest carriers surveyed, Maersk and CMA CGM, firmly in the black, the remaining 17 lines combined to produce more than $2 billion in operating losses. With their results last year, Maersk and CMA CGM “extended the gap between themselves and the rest of the industry,” Alphaliner said. Analysts are certainly far from declaring Maersk any sort of winner. Jefferies’ Hong Kong-based analyst Johnson Leung says Maersk’s profits would have been 70 percent or roughly $1 billion lower last year if it paid APM Terminals, which handled 18 million Maersk Line TEUs, the same amount that its competitors paid — $149 per TEU versus the $90 paid by Maersk, Leung said. As a result of the discounts it charges Maersk, “APMT is currently generating less than half of the EBITDA margin of its Asian counterparts,” he wrote in March. But like other analysts he agreed that Maersk’s diversified global route network is playing to its advantage. The more profitable intra-regional, trans-Atlantic and North-South trades, including Africa routes, account for half of Maersk’s total volume, which protects it from the volatility of Asia-Europe and the trans-Pacific. And in the east-west trades Maersk will be in an entrenched position with lower operating costs relative to smaller carriers thanks to its participation in the P3 Network with CMA CGM and Mediterranean Shipping Co. Ships in the P3 alliance will be larger on average than those of the other major alliances. “Maersk Line always has a huge financial performance advantage over the other carriers because of its route mix and also the deals that it has with its associated companies like APMT,” Leung told the JOC. Maersk has also been more firm in collecting detention and demurrage in the last few years, and as a carrier with a heavy concentration of business in Europe it may enjoy advantages in bunkering in Europe, which is cheaper than in Asia. Maersk itself is talking in more expansive terms about its network and how it plays to its advantage. In a recent blog post on its website titled “ Major network overhaul paid off ,” it described a “fundamental shift in philosophy” toward a single, holistic view of its network, replacing a trade-lane-by-trade-lane approach. “Instead of optimizing the network to cater for the many individual markets serviced by Maersk Line, the network has now been optimized as one. This means looking at all routes with all departures and arrivals as one single network to be optimized to cater for the needs of all customers in the most efficient way across markets and routes,” it said. “The new approach also has its trade-offs, the obvious ones being a slower service due to more reloadings and slower journeys when at sea. These are countered by adding more stops that create a more finely meshed network providing more flexible services to the customers.” Others have remarked on the competitive advantage gained from the network. In a Q&A session at the 2014 TPM conference in Long Beach last month, former NOL Group CEO Ron Widdows, currently CEO of Rickmers Group, gave kudos to Maersk’s expansive network in the context of the company being able to effectively utilize 18,000-TEU ships in contrast to smaller carriers also deploying ships of that size. “Maersk is, my own view … about the only people on the planet that can make use of that 18,000-TEU ship in an intelligent way. They have this massive network. They have a terminal network for connectivity. They have a north-south flow that is huge to connect to the east-west network. It’s just a big asset moving across multiple markets, [which] ... has cost implications to them; the ability to reuse those slots as it moves across their network,” Widdows said. “A small carrier who steps up to a ship like that, well, he doesn’t have that network. So, to load it here and dump it there, okay, there are economies of scale that come from that. But that’s far different from the kind of application that a company like Maersk will use,” he said. Some believe that the transformation Maersk has undergone in recent years under CEO Soren Skou will further help widen the gap between it and the rest of the industry. “It would certainly appear to be the case” that Maersk is pulling away from the pack, said SeaIntel CEO and Partner Lars Jensen. “Although in a shipping market context ‘pulling away’ needs to be seen over a sustained period of multiple years in order to separate short-term savings from genuine productivity improvements.” “I also see this linked to the organizational and cultural transformation they have been going through in the past years, which means that Maersk Line today has a very different mentality which is much better suited for the competitive environment of today — a transformation the majority of their peers have not yet gone through,” said Jensen, who will publish a book in May titled “Culture Shock in Maersk Line.” Other analysts see in the 2013 results the advantages that larger carriers have over smaller ones. CMA CGM, the No. 3 carrier in capacity deployed, achieved a 4.8 percent margin and $756 million in operating margin, the second-highest in both measurements after Maersk. It is not known how the No. 2 carrier, MSC, performed, as it doesn’t report publicly. “Maersk Line and CMA CGM, who are both members of the P3 Network together with MSC, enjoy significant advantages compared to the other carriers,” Alphaliner said on April 1. “On their main linehaul routes, the two carriers were ... able to deploy the largest ships on their respective trades, allowing them to enjoy the lowest unit costs in the market.” Contact Peter Tirschwell at ptirschwell@joc.com and follow him on Twitter: @petertirschwell .

Container lines

Is Maersk Pulling Away From the Pack?

<div class="phx-topic abstract-wrapper">Diversifying suppliers out of China has been a long-term trend among tech companies, but a recent acceleration of that shift is driven by fresh trade tensions rather than a desire to divest entirely, says Everstream Analytics.</div>

Diversifying suppliers out of China has been a long-term trend among tech companies, but a recent acceleration of that shift is driven by fresh trade tensions rather than a desire to divest entirely, says Everstream Analytics.

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<div class="phx-topic">Escalating trade tensions and ongoing tariff uncertainties are adding to rising labor costs, prompting technology giants to accelerate the diversification of suppliers away from China, according to a new report from supply chain insight provider Everstream Analytics. While the diversification of manufacturing has been a long-term trend, the recent increase in that shift is being driven more by the need to reduce short-term risk in the face of recent trade disruption rather than a desire to completely divest from China, noted Jena Santoro, global head of research and analytics at Everstream. ”Our analysis shows Thailand and Vietnam have nearly doubled their tech suppliers since 2019, while companies like HP are committing to move 90% of their manufacturing out of China by next year,” Santoro told the Journal of Commerce Thursday. The report, “Shifting away from China,” analyzed supplier data from 2019 to 2024 from tech majors that included Samsung, Apple, Dell, Nokia and NXP, and found the companies were moving core product lines to alternative manufacturing centers. India, Malaysia, Thailand, Vietnam and Taiwan have emerged as the most prominent alternative suppliers to China for the technology industry, the report found. The products most affected by the diversification strategies were smartphones, smart watches, computers and laptops. “But the reality is that China spent more than 30 years building its manufacturing ecosystem, and it may take just as long for alternatives to match that scale,” Santoro said. “So, while companies are absolutely diversifying, and they need to, this is about reducing risk, not replacing China entirely. At least not anytime soon.” <h3>End of 90-day pause on tariffs </h3>The Everstream report highlighted the upcoming end to the 90-day pause on US tariffs on China on Aug. 14 and the trade restrictions that could be imposed following its expiry. “Trade between China and the US remains unstable, with the current negotiations only resulting in a 90-day pause on the escalated tariff scheme which includes a 125% import tariff on Chinese goods,” the report stated. “This level of tariff would make many technology products prohibitively expensive if manufactured entirely in China, creating strong financial incentives for diversification,” it added. “Global technology manufacturers will likely continue to seek alternative suppliers in countries perceived as less risky for business continuity.” On top of the trade tensions are long-term trends in China’s workforce that have led to an increasingly less cost-efficient labor market, a factor that has long encouraged companies to consider investing in cheaper production systems in other parts of the world as a way to increase margins. That trend shows no signs of reversal, as China no longer has the developing economy wages it once had. “Given these...realities, technology supply chains with procurement operations integrated in China have become less stable and reliably more expensive than potential alternatives,” the Everstream report found. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com.</a></div>

Escalating trade tensions and ongoing tariff uncertainties are adding to rising labor costs, prompting technology giants to accelerate the diversification of suppliers away from China, according to a new report from supply chain insight provider Everstream Analytics. While the diversification of manufacturing has been a long-term trend, the recent increase in that shift is being driven more by the need to reduce short-term risk in the face of recent trade disruption rather than a desire to completely divest from China, noted Jena Santoro, global head of research and analytics at Everstream. ”Our analysis shows Thailand and Vietnam have nearly doubled their tech suppliers since 2019, while companies like HP are committing to move 90% of their manufacturing out of China by next year,” Santoro told the Journal of Commerce Thursday. The report, “Shifting away from China,” analyzed supplier data from 2019 to 2024 from tech majors that included Samsung, Apple, Dell, Nokia and NXP, and found the companies were moving core product lines to alternative manufacturing centers. India, Malaysia, Thailand, Vietnam and Taiwan have emerged as the most prominent alternative suppliers to China for the technology industry, the report found. The products most affected by the diversification strategies were smartphones, smart watches, computers and laptops. “But the reality is that China spent more than 30 years building its manufacturing ecosystem, and it may take just as long for alternatives to match that scale,” Santoro said. “So, while companies are absolutely diversifying, and they need to, this is about reducing risk, not replacing China entirely. At least not anytime soon.” End of 90-day pause on tariffs The Everstream report highlighted the upcoming end to the 90-day pause on US tariffs on China on Aug. 14 and the trade restrictions that could be imposed following its expiry. “Trade between China and the US remains unstable, with the current negotiations only resulting in a 90-day pause on the escalated tariff scheme which includes a 125% import tariff on Chinese goods,” the report stated. “This level of tariff would make many technology products prohibitively expensive if manufactured entirely in China, creating strong financial incentives for diversification,” it added. “Global technology manufacturers will likely continue to seek alternative suppliers in countries perceived as less risky for business continuity.” On top of the trade tensions are long-term trends in China’s workforce that have led to an increasingly less cost-efficient labor market, a factor that has long encouraged companies to consider investing in cheaper production systems in other parts of the world as a way to increase margins. That trend shows no signs of reversal, as China no longer has the developing economy wages it once had. “Given these...realities, technology supply chains with procurement operations integrated in China have become less stable and reliably more expensive than potential alternatives,” the Everstream report found. Contact Greg Knowler at greg.knowler@spglobal.com.

Transport, Trade and Regulation News

Supply chain

Tech giants shift production out of China as trade tariffs raise supply risk: analysis

<div class="phx-topic abstract-wrapper">The carrier said vessels on the five-day transit to Philadelphia will carry food, apparel, industrial products and consumer goods. </div>

The carrier said vessels on the five-day transit to Philadelphia will carry food, apparel, industrial products and consumer goods.

<div class="phx-topic">US-based ocean carrier Crowley will expand its intra-Americas network in July with a new direct service linking ports in Guatemala and Honduras to Philadelphia. The five-day transit will be Crowley’s first route between Central America and the US East Coast. The first northbound voyage for the service, using the 1,400-TEU Copan, will leave Central America for Philadelphia on July 3. A statement from Crowley this week announcing the service did not provide details on its frequency but said the vessels will carry food, apparel, industrial products and consumer goods. Reinier van Delden, vice president of commercial operations for Crowley Logistics, said in the statement the service, using new LNG-powered vessels, will “deliver the fastest transit times in the market.” “This means less inventory idle time, lower supply chain costs, and longer shelf life for critical products like fresh produce,” he said. The service, which van Delden said already has “significant booking commitments,” will serve Central America’s Northern Zone, which includes El Salvador and Nicaragua in addition to Guatemala and Honduras. The vessels used by Crowley for the service can carry various container sizes for dry cargo and have capacity for 300 refrigerated boxes. According to data from PIERS, a sister company of the Journal of Commerce within S&amp;P Global, import volumes from Central America’s Northern Zone into the East Coast of North America have been relatively steady in recent years; May 2025 volumes of 50,121 TEUs were down just 3.3% from May 2019. PIERS data shows imports from the Northern Zone accounted for 3.2% of imports to the East Coast of North America in May. In March, which is the peak season for Central American plantain exports, that share climbed to 3.6%. Northbound perishables cargo includes plantains, pineapples and melons, according to PIERS. The new service from Crowley comes after the company launched in May a three-day ocean service from Tuxpan, Mexico, to Gulfport, Mississippi. Crowley also started a <a href="https://www.joc.com/article/crowley-cn-strike-mexico-intermodal-deal-through-port-of-mobile-5220379">multimodal Mexico-US service in 2023</a>. Also this week, Green Tide Logistics <a href="https://www.joc.com/article/mexico-us-ocean-market-expands-amid-growing-nearshoring-interest-6031786">announced a combined truck-ocean service</a> linking the Gulf Coast of Mexico with Philadelphia. Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>.  </div>

US-based ocean carrier Crowley will expand its intra-Americas network in July with a new direct service linking ports in Guatemala and Honduras to Philadelphia. The five-day transit will be Crowley’s first route between Central America and the US East Coast. The first northbound voyage for the service, using the 1,400-TEU Copan, will leave Central America for Philadelphia on July 3. A statement from Crowley this week announcing the service did not provide details on its frequency but said the vessels will carry food, apparel, industrial products and consumer goods. Reinier van Delden, vice president of commercial operations for Crowley Logistics, said in the statement the service, using new LNG-powered vessels, will “deliver the fastest transit times in the market.” “This means less inventory idle time, lower supply chain costs, and longer shelf life for critical products like fresh produce,” he said. The service, which van Delden said already has “significant booking commitments,” will serve Central America’s Northern Zone, which includes El Salvador and Nicaragua in addition to Guatemala and Honduras. The vessels used by Crowley for the service can carry various container sizes for dry cargo and have capacity for 300 refrigerated boxes. According to data from PIERS, a sister company of the Journal of Commerce within S&P Global, import volumes from Central America’s Northern Zone into the East Coast of North America have been relatively steady in recent years; May 2025 volumes of 50,121 TEUs were down just 3.3% from May 2019. PIERS data shows imports from the Northern Zone accounted for 3.2% of imports to the East Coast of North America in May. In March, which is the peak season for Central American plantain exports, that share climbed to 3.6%. Northbound perishables cargo includes plantains, pineapples and melons, according to PIERS. The new service from Crowley comes after the company launched in May a three-day ocean service from Tuxpan, Mexico, to Gulfport, Mississippi. Crowley also started a multimodal Mexico-US service in 2023 . Also this week, Green Tide Logistics announced a combined truck-ocean service linking the Gulf Coast of Mexico with Philadelphia. Contact Laura Robb at laura.robb@spglobal.com . 

Maritime

Container Shipping News

Crowley launches first service linking Central America to US East Coast

<div class="phx-topic abstract-wrapper">Swire, UWL’s original partner for the express service to Seattle, will phase out its vessels during July while new partner Emirate Shipping Line rotates into the loop.</div>

Swire, UWL’s original partner for the express service to Seattle, will phase out its vessels during July while new partner Emirate Shipping Line rotates into the loop.

<div class="phx-topic">Third-party logistics provider UWL is switching the ocean carrier it uses for its Vietnamese trans-Pacific container service to Seattle — and swapping in a new China call on the loop — with a view to eventually offering weekly sailings on the niche service. UWL Chief Executive Duncan Wright said in a letter to customers this week the company signed a contract with Emirates Shipping Line (ESL) to become the new vessel operator on its Sun Chief Express Service, replacing Swire Shipping, part of Asian conglomerate Swire Group. UWL originally partnered with Swire <a href="https://www.joc.com/article/new-vietnam-pnw-express-service-comes-amid-rise-in-se-asia-imports-5195234">to launch the Sun Chief Express in 2022</a>. The service connects Vietnam’s Hai Phong and Ho Chi Minh City ports with Seattle, offering about 2,700 TEUs in biweekly vessel capacity and an approximate 20-day sailing time. Wright said that while UWL was vetting other vessel operators for possibly offering a weekly service, Swire decided to “phase out” its involvement in the Sun Chief service. The last Swire ship will depart Ho Chi Minh port on July 14, while two westbound sailings during July on Swire vessels will be blanked as part of the phaseout. The first ESL vessel, the 2,782-TEU Bright, will depart Ho Chi Minh port on July 22. It will call Shekou in China before continuing to Seattle. The Sun Chief service will remain biweekly for the time being. Dubai-based ESL is the 23rd-largest ocean carrier globally, focusing chiefly on “niche and emerging trade lanes across Asia, the Middle East, and Africa,” UWL said. ESL operates a fleet of 11 ships, with capacities ranging between 2,700 TEUS and 6,700 TEUs. UWL added that ESL’s experience in the intra-Asia trade will allow the Sun Chief to eventually serve “additional key markets across Southeast Asia and the Indian Subcontinent.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Third-party logistics provider UWL is switching the ocean carrier it uses for its Vietnamese trans-Pacific container service to Seattle — and swapping in a new China call on the loop — with a view to eventually offering weekly sailings on the niche service. UWL Chief Executive Duncan Wright said in a letter to customers this week the company signed a contract with Emirates Shipping Line (ESL) to become the new vessel operator on its Sun Chief Express Service, replacing Swire Shipping, part of Asian conglomerate Swire Group. UWL originally partnered with Swire to launch the Sun Chief Express in 2022 . The service connects Vietnam’s Hai Phong and Ho Chi Minh City ports with Seattle, offering about 2,700 TEUs in biweekly vessel capacity and an approximate 20-day sailing time. Wright said that while UWL was vetting other vessel operators for possibly offering a weekly service, Swire decided to “phase out” its involvement in the Sun Chief service. The last Swire ship will depart Ho Chi Minh port on July 14, while two westbound sailings during July on Swire vessels will be blanked as part of the phaseout. The first ESL vessel, the 2,782-TEU Bright, will depart Ho Chi Minh port on July 22. It will call Shekou in China before continuing to Seattle. The Sun Chief service will remain biweekly for the time being. Dubai-based ESL is the 23rd-largest ocean carrier globally, focusing chiefly on “niche and emerging trade lanes across Asia, the Middle East, and Africa,” UWL said. ESL operates a fleet of 11 ships, with capacities ranging between 2,700 TEUS and 6,700 TEUs. UWL added that ESL’s experience in the intra-Asia trade will allow the Sun Chief to eventually serve “additional key markets across Southeast Asia and the Indian Subcontinent.” Contact Michael Angell at michael.angell@spglobal.com .

Trans-Pacific

UWL locks in new vessel partner for trans-Pacific Vietnam service

<div class="phx-topic abstract-wrapper">Unifor, the union representing more than 2,100 truck drivers, couriers, and warehouse and clerical workers in seven Canadian provinces, will vote on the agreement on Friday and Saturday.</div>

Unifor, the union representing more than 2,100 truck drivers, couriers, and warehouse and clerical workers in seven Canadian provinces, will vote on the agreement on Friday and Saturday.

<div class="phx-topic">DHL Express Canada and its union have reached an agreement in principle to end a contract dispute that forced the parcel carrier to shut down service in the country late last week. Terms of the deal were not disclosed. Unifor, the union representing more than 2,100 truck drivers, couriers, and warehouse and clerical workers in seven Canadian provinces, will vote on the tentative deal on Friday and Saturday. “Upon successful ratification, DHL Express Canada expects to lift [the] service suspension with immediate effect,” the company said in a statement late Wednesday. DHL Express Canada locked out Unifor workers on June 8 after the two sides couldn’t reach a deal on a new collective bargaining agreement. DHL was <a href="https://www.joc.com/article/dhl-express-to-suspend-canadian-parcel-business-amid-labor-dispute-6026786">forced to shut down service</a> as of June 20, the day Canadian federal legislation preventing the use of replacement workers went into effect. As a result, DHL stopped accepting parcels within Canada as well as cross-border US-Canada business. The move did not affect the company’s less-than-truckload or other supply chain service businesses. DHL’s competitors such as Canada Post, FedEx, and UPS were operating normally, so the overall disruption within Canada was minimal. Nevertheless, shippers who had to make last-minute changes were paying higher rates. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

DHL Express Canada and its union have reached an agreement in principle to end a contract dispute that forced the parcel carrier to shut down service in the country late last week. Terms of the deal were not disclosed. Unifor, the union representing more than 2,100 truck drivers, couriers, and warehouse and clerical workers in seven Canadian provinces, will vote on the tentative deal on Friday and Saturday. “Upon successful ratification, DHL Express Canada expects to lift [the] service suspension with immediate effect,” the company said in a statement late Wednesday. DHL Express Canada locked out Unifor workers on June 8 after the two sides couldn’t reach a deal on a new collective bargaining agreement. DHL was forced to shut down service as of June 20, the day Canadian federal legislation preventing the use of replacement workers went into effect. As a result, DHL stopped accepting parcels within Canada as well as cross-border US-Canada business. The move did not affect the company’s less-than-truckload or other supply chain service businesses. DHL’s competitors such as Canada Post, FedEx, and UPS were operating normally, so the overall disruption within Canada was minimal. Nevertheless, shippers who had to make last-minute changes were paying higher rates. Contact Ari Ashe at ari.ashe@spglobal.com .

Surface

Trucking labor

Trucking News

DHL, union workers reach tentative deal to end Canadian work stoppage

<div class="phx-topic abstract-wrapper">Tariff uncertainty, weakening demand and an abundance of capacity are hanging over the container shipping industry, the global bank said in a report Thursday. </div>

Tariff uncertainty, weakening demand and an abundance of capacity are hanging over the container shipping industry, the global bank said in a report Thursday.

<div class="phx-topic">Ocean carriers can expect a sharp decline in earnings over the next three years as overcapacity potentially triggers “an aggressive price war,” with 2027 representing the bottom of the profitability “trough,” HSBC said Thursday in its latest container shipping report. Transportation analysts at the global bank indicated in the report that while carriers will remain profitable through the period, it will be nowhere near the three record years of 2021, 2022 and 2024. “We expect tariff uncertainties to weigh on demand from [the second half of 2025] and bring the focus back to overcapacity and earnings downside,” the report stated. HSBC is expecting a 45% year-over-year <a href="https://www.joc.com/article/global-uncertainty-to-erode-ocean-carrier-profits-in-2025-6016400">decline in profits for the container shipping</a> industry this year, a steeper 61% decline in profits in 2026 and a further 10% slide in 2027. No profit amounts were provided. “We expect profits for the sector through 2027, but an aggressive price war by carriers could drive losses,” the bank said. Carriers earned close to $60 billion in operating profits in 2024, which followed a $1.4 billion loss the previous year. Pandemic-driven profits in 2022 hit a record $208 billion, beating the previous record of $110 billion set in 2021. Fast-declining rates will impact earnings over the next three years, with HSBC expecting the Shanghai Containerized Freight Index (SCFI) to drop by 35% in 2025 and 2026 and another 15% in 2027. <h3>Profit-slashing forecasts </h3>HSBC’s prediction is the latest in a series of profit-slashing forecasts from industry analysts as momentum is expected to slow on the trans-Pacific after existing tariff reprieves end and concerns grow of a destocking cycle in the US. The 90-day pause on global tariffs by the US ends on July 9, with a similar pause on China tariffs expiring Aug. 14. Among nine publicly traded ocean carriers, revenue for 2025 is expected to reach $138.2 billion, according to Capital IQ Estimates, down from $155.5 billion in 2024. Capital IQ is a sister company of the Journal of Commerce within S&amp;P Global. Drewry earlier this month outlined its profit forecast for carriers, expecting operating profit for the industry to fall to $20 billion this year, down from over $50 billion in 2024. Hapag-Lloyd, Evergreen and Yang Ming have maintained their 2025 profit forecasts, while Maersk, HMM and Ocean Network Express have cut their full-year guidance because of the uncertainty surrounding tariffs. “Frontloading in the trans-Pacific on tariff concerns buoyed first-quarter earnings, while a tariff pause-led cargo rush drove a 73% surge in the SCFI during the second quarter,” the HSBC report noted. Spot rates from Asia to the US West Coast peaked on June 6 at $6,040 per FEU but have fallen 55% since then to $2,700 per FEU as of Wednesday, down 16% on the week, according to Platts, a Journal of Commerce sister company within S&amp;P Global. <h3>Red Sea diversions elevate rates </h3>Rates on the Asia-Europe trade lane have held at elevated levels because of the ongoing longer transits around southern Africa to avoid potential Houthi militant attacks in the Red Sea, HSBC said. Following the latest Middle East conflict between Israel and Iran, those diversions will persist until at least mid-2026, according to the bank. “We expect effective [capacity] supply growth of 6.5% in 2026 and around 10% in 2027, against nominal fleet growth of 3% to 4%, due to unwinding of Red Sea rerouting and demand growth of just 2% in 2025–27,” the report said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="69b3a8ec-2292-4049-b638-cc81b01d32ad"></dynamic-object></div>Shipping association Bimco was less optimistic about a return of commercial shipping to Red Sea transits next year. “We expect the supply-demand balance to weaken only slightly in 2025 and 2026 as our ship demand growth forecast now excludes a return to normal Red Sea and Suez Canal routings,” Niels Rasmussen, the group’s chief shipping analyst, wrote in a report this week. Bimco has forecast the global fleet will grow to 33.6 million TEUs by the end of 2026, up 2.8 million TEUs in 24 months, although ship scrapping is expected to increase as market conditions worsen. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Ocean carriers can expect a sharp decline in earnings over the next three years as overcapacity potentially triggers “an aggressive price war,” with 2027 representing the bottom of the profitability “trough,” HSBC said Thursday in its latest container shipping report. Transportation analysts at the global bank indicated in the report that while carriers will remain profitable through the period, it will be nowhere near the three record years of 2021, 2022 and 2024. “We expect tariff uncertainties to weigh on demand from [the second half of 2025] and bring the focus back to overcapacity and earnings downside,” the report stated. HSBC is expecting a 45% year-over-year decline in profits for the container shipping industry this year, a steeper 61% decline in profits in 2026 and a further 10% slide in 2027. No profit amounts were provided. “We expect profits for the sector through 2027, but an aggressive price war by carriers could drive losses,” the bank said. Carriers earned close to $60 billion in operating profits in 2024, which followed a $1.4 billion loss the previous year. Pandemic-driven profits in 2022 hit a record $208 billion, beating the previous record of $110 billion set in 2021. Fast-declining rates will impact earnings over the next three years, with HSBC expecting the Shanghai Containerized Freight Index (SCFI) to drop by 35% in 2025 and 2026 and another 15% in 2027. Profit-slashing forecasts HSBC’s prediction is the latest in a series of profit-slashing forecasts from industry analysts as momentum is expected to slow on the trans-Pacific after existing tariff reprieves end and concerns grow of a destocking cycle in the US. The 90-day pause on global tariffs by the US ends on July 9, with a similar pause on China tariffs expiring Aug. 14. Among nine publicly traded ocean carriers, revenue for 2025 is expected to reach $138.2 billion, according to Capital IQ Estimates, down from $155.5 billion in 2024. Capital IQ is a sister company of the Journal of Commerce within S&P Global. Drewry earlier this month outlined its profit forecast for carriers, expecting operating profit for the industry to fall to $20 billion this year, down from over $50 billion in 2024. Hapag-Lloyd, Evergreen and Yang Ming have maintained their 2025 profit forecasts, while Maersk, HMM and Ocean Network Express have cut their full-year guidance because of the uncertainty surrounding tariffs. “Frontloading in the trans-Pacific on tariff concerns buoyed first-quarter earnings, while a tariff pause-led cargo rush drove a 73% surge in the SCFI during the second quarter,” the HSBC report noted. Spot rates from Asia to the US West Coast peaked on June 6 at $6,040 per FEU but have fallen 55% since then to $2,700 per FEU as of Wednesday, down 16% on the week, according to Platts, a Journal of Commerce sister company within S&P Global. Red Sea diversions elevate rates Rates on the Asia-Europe trade lane have held at elevated levels because of the ongoing longer transits around southern Africa to avoid potential Houthi militant attacks in the Red Sea, HSBC said. Following the latest Middle East conflict between Israel and Iran, those diversions will persist until at least mid-2026, according to the bank. “We expect effective [capacity] supply growth of 6.5% in 2026 and around 10% in 2027, against nominal fleet growth of 3% to 4%, due to unwinding of Red Sea rerouting and demand growth of just 2% in 2025–27,” the report said. Shipping association Bimco was less optimistic about a return of commercial shipping to Red Sea transits next year. “We expect the supply-demand balance to weaken only slightly in 2025 and 2026 as our ship demand growth forecast now excludes a return to normal Red Sea and Suez Canal routings,” Niels Rasmussen, the group’s chief shipping analyst, wrote in a report this week. Bimco has forecast the global fleet will grow to 33.6 million TEUs by the end of 2026, up 2.8 million TEUs in 24 months, although ship scrapping is expected to increase as market conditions worsen. Contact Greg Knowler at greg.knowler@spglobal.com .

Ocean carriers face three-year decline in profitability: HSBC

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The world of LTL is slow to embrace change. Business anachronisms permeate current supply chain processes. These vestiges of the way things used to work define the LTL freight transportation procurement process of many modern shippers.David Knuth, logistics specialist at IEWC, a global supplier of cable and wire based in Wisconsin, is happy to have modernized the RFP process, automating the entire LTL bidding procedure with Bid$ense, SMC³’s automated truckload and LTL freight transportation sourcing solution. But when prompted, he can still recall what once was.In his previous job, a large part of his duties were consumed by creating an intermodal bid package for carriers. In a spreadsheet, Knuth detailed the company’s volumes lane by lane, taking care to delete any errant keystrokes or misleading data. He would then email out the information to each carrier, taking time to respond to detailed technical questions about the spreadsheet data. Finally, he had to compile all the results, create an algorithm that would compare the carriers on each lane, and award the business.“It was a huge undertaking. It took about four months to do,” Knuth said of the old process. “It was almost a full-time job for that part of the year, every year.”In his new job at IEWC, he sat down with Bid$ense on day one and was amazed at the capabilities. Knuth had never before used a bid tool. SMC³’s latest versions of Bid$ense automate the process even further, taking truckload and LTL RFPs entirely online. The tool draws on RFP best-practices protocols to streamline the bidding communication process, enabling bidding carriers to respond accurately and promptly to shipper requests. The solution also does all the distribution work automatically, electronically submitting shipper bid data to carriers based on their actual service capabilities and performance records. Carriers are alerted with timely prompts for RFP deliverables, so shippers aren’t waiting by the phone for responses.Another benefit of automating the process is the data-cleansing assistance. When Knuth sent spreadsheets to carriers, data errors might cloud the bidding process; he might have to resend data or simply accept a price that did not truly reflect the costs of doing business. Data cleansing is incredibly beneficial, he said.The spreadsheet technique also made bidding analysis an onerous task. Since Bid$ense automates and streamlines the entire RFP process, intensive examination is now simple. SMC³ knows that each bid has more than one best outcome. With uniform responses from each carrier, shippers can quickly rank results and create an unlimited quantity of what-if scenarios to make the optimal procurement decision.Jesse Burnett of Central Garden &amp; Pet experiences many of the same benefits. Founded in 1980, Central Garden &amp; Pet has spent the last three decades growing from a small garden supply company to a provider of a range of products from dog chews and bird seed to soil supplements and natural insecticides. For much of its life, the company shipped these disparate goods via LTL and truckload carriers to retailers throughout the country, relying on each business unit to negotiate directly with their freight transportation providers. This arrangement worked fairly well for a small company, but as Central Garden &amp; Pet expanded, leadership decided to consolidate decision making.Burnett helped centralize the transportation decision making in 2015 with SMC³’s Bid$ense. Before Bid$ense, every business unit operated independently as far as negotiating with carriers.“There were a lot of different things just floating around,” he said. “We didn’t have master agreements in place; no national pricing at all. The pricing from carriers was just all over the place, depending on where you were.”The transformations he saw with Bid$ense were immediate. Burnett has been using the tool about every other year since its implementation at the company. Central Garden and Pet’s $19.6 million 2019 LTL bid saved the company just more than 9 percent when compared to its historical average. For Burnett, though, bid automation extends far beyond savings.“We knew that we weren’t getting the best pricing offer from our carriers just because nothing was centralized,” he continued. “We knew that if we combined everything from all these business units and paired it with one corporate offering, then it would drive some cost benefit with it.”When the company initially decided to centralize bid procurement, executives researched a number of different methodologies and technologies. In the end, though, Burnett found that Bid$ense was both widespread and well known, and that his carrier partners already knew how to use the application. Burnett also highlighted the data-cleansing process as a major benefit, saying the rigorous process ensures that carriers always return the best price.“It definitely has helped drive savings,” he said. “Any time you go out there and you drive that competitiveness with the carriers and they know they’re in a bid environment, it seems to sharpen their pencils.”Transportation procurement is an integral part of the modern supply chain. With Bid$ense, shippers can develop a strategic implementation plan that saves them time and money, but also helps them create strong relationships with their carrier partners. These carriers appreciate the solution’s data-cleansing process; when carriers receive a complete shipment history and future volume forecast, they don’t have to guess on pricing. Carriers that receive more data from shippers get a complete picture of that shipper’s freight, allowing them to accurately plan instead of simply preparing for the worst-case scenario. Clean data presented through an automated system can lead to both bigger shipment savings and a lasting partnership between carrier and customer.Whether customers are looking to streamline over-the-road transportation bidding by automating the RFP process or create an entirely new, centralized sourcing process, Bid$ense has the analytical horsepower to get the job done.SMC³ 2020 Customer Case Study

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Shippers save money, time with automated transportation bidding tools

If there’s one immutable truth in the world of logistics, it’s this: LTL is an inherently complex form of transportation. Tariffs, rates, DIM weights, transit times — it’s enough to confuse even seasoned logistics professionals. The solution to this knowledge gap has historically been on-the-job training or university supply chain education, but for a variety of reasons there is now a pressing need for third-party, remote LTL training that prepares logistics workers for transportation success. Global Scope Can Overlook Local Intricacies In the past, professionals looking to move into a supply chain career learned about the basics of supply chain from universities. However, many of these college supply chain programs are now global in scope, focusing on worldwide supply chain management instead of the intricacies of specialized domestic transportation. And even these programs, which used to be widespread, are becoming less common. LTL is not an industry of broad-brush strokes; supply chain professionals really need a pointillistic understanding of the logistics of LTL in order to excel in the industry. Accelerating Need for Dedicated LTL Education This lack of specified training put the onus on employers to prepare new hires with the LTL knowledge needed to do their jobs. Dedicated LTL study is a necessity, not a luxury. At the same time, changes in LTL and the broader supply chain world are accelerating. The reliance on e-commerce has ballooned since the start of the pandemic, and last-mile LTL shipments and related e-commerce strains on the supply chain won’t diminish once social distancing abates. That genie isn’t going back into the bottle. So supply chain employers need logistics workers that are fully versed in all aspects of the industry, ready to solve unique shipping and delivery problems based on their extensive supply chain knowledge But why care about LTL? It’s been reported that some shippers in today’s world are no longer concerned with what mode is used to ship their goods. A Multimodal Approach Ensures On-Time Delivery This mode agnosticism means supply chain stakeholders have to be well versed in all modes of transportation. As unforeseen weather events and other disruptions, such as protests, become more common, savvy logistics employees will need to be armed with familiarity of all modes, not just the most popular, to ensure that freight is delivered on time, without damage, and in the most financially expedient way possible. Offerings like SMC³’s LTL online education courses cover a wide range of topics from LTL basics and operations to more advanced concepts like pricing analytics and transportation law. The company also has plans to continually refresh content, adding new expert presenters and taking the feedback of students to make the courses even better as time goes on. Learn more about&nbsp;<a href="https://logisticstrainingcenter.com/smc3-courses/" rel="noreferrer" class="joc_admin__link">SMC³’s LTL Online Education program</a>&nbsp;and view the 2021 hybrid schedule, featuring live industry experts,&nbsp;<a href="https://www.smc3.com/onlinelearning2021/" rel="noreferrer" class="joc_admin__link">here.</a>

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