<div class="phx-topic abstract-wrapper">Japan Air Lines reported a net loss of 6.3 billion yen (US$46 million) in fiscal 1986 after losing 6</div>

Japan Air Lines reported a net loss of 6.3 billion yen (US$46 million) in fiscal 1986 after losing 6

<div>Japan Air Lines reported a net loss of 6.3 billion yen (US$46 million) in fiscal 1986 after losing 6.7 billion yen in fiscal 1985.The Tokyo-based carrier said operating revenue fell 5.5 percent to 779 billion yen (US$5.6 billion) in the 1986 fiscal year, which ended March 31. JAL expects profits for the current fiscal year to climb to 4 billion yen (US$28 million) and revenue to reach 807.8 billion yen (US$5.8 billion.The airline reported pretax earnings of 3.6 billion yen (US$26 million) in fiscal 1986 after losing 1.6 billion yen (US$11 million) in fiscal 1985.JAL said the yen's rise, which...

Japan Air Lines reported a net loss of 6.3 billion yen (US$46 million) in fiscal 1986 after losing 6.7 billion yen in fiscal 1985. The Tokyo-based carrier said operating revenue fell 5.5 percent to 779 billion yen (US$5.6 billion) in the 1986 fiscal year, which ended March 31. JAL expects profits for the current fiscal year to climb to 4 billion yen (US$28 million) and revenue to reach 807.8 billion yen (US$5.8 billion.The airline reported pretax earnings of 3.6 billion yen (US$26 million) in fiscal 1986 after losing 1.6 billion yen (US$11 million) in fiscal 1985. JAL said the yen's rise, which makes Japanese services more expensive for foreigners, was blamed for a drop in revenue. Pretax earnings increased as a result of increased air cargo volume and reduced fuel costs resulting from lower crude oil prices stemming from the yen's sharp rise against the dollar.

Air Cargo

JAL LOSS NARROWED DURING 1986

<div class="phx-topic abstract-wrapper">The investment plan was developed amid growing alarm that the country is losing out in the trade stakes due to a lack of investment by South Korean companies in overseas logistics facilities.</div>

The investment plan was developed amid growing alarm that the country is losing out in the trade stakes due to a lack of investment by South Korean companies in overseas logistics facilities.

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<div class="phx-topic">South Korea will invest $3 billion to expand the country's global terminals and logistics network to help strengthen trade efforts in an increasingly challenging business environment. A three-point plan unveiled by the country’s Ocean and Fisheries Ministry Monday involves increasing the number of publicly supported logistics facilities in other countries from nine to 40, securing investment in 10 overseas port terminals, and helping to develop three major logistics companies by 2030. Priority will be given to investing in storage and processing facilities, including warehouses and container yards in 11 existing target markets that include the US, Canada, Mexico, Vietnam, Indonesia, Thailand, Germany and Poland. The 11 were chosen based on the volume of import and export trade with South Korea over the past 10 years. "Securing overseas logistics bases is a key task for stabilizing the supply chain in an uncertain logistics environment," Vice Minister of Oceans and Fisheries Kim Seong-beom said in a statement announcing the initiative. “...We will strengthen our logistics competitiveness and firmly support the import and export economy." Most of the investment will be overseen by the government-backed Korea Ocean Business Corporation (KOBC). The plan calls for the creation of a foreign terminal investment group involving KOBC, shipping companies, logistics operators and port authorities such as Busan that will assess potential terminal targets and develop expansion strategies. Also part of the proposal is the creation of a container terminal investment fund that will be given $670 million to secure stakes in foreign terminals “and use this as a springboard to secure terminal operation rights in the future,” the ministry said. Cash available through KOBC’s Global Logistics Supply Chain Investment Fund will double to $1.3 billion to help small and medium-sized logistics companies expand overseas. <h3>Shift in global trade environment </h3>The investment plan was developed amid growing alarm that South Korea is losing out in the trade stakes due to the lack of investment by South Korean companies in overseas logistics facilities. "Due to changes in the global trade environment represented by tariff hikes, the protracted Russia-Ukraine war, the Red Sea conflict, and the intensification of the climate crisis, supply chain instability has been increasing in the global logistics market in recent years,” the ministry said. “As a result, logistics companies and shipping companies in various countries are strengthening their market dominance by securing logistics infrastructure and acquiring container terminals.” Only 9% of the overseas logistics centers operated by 15 of South Korea’s top companies are owned facilities, the rest are leased, the ministry said. ”There is a high risk of disruption in the provision of logistics services due to the rapid rise in logistics costs and difficulty in securing facilities at the right time in the event of a supply chain crisis,” it said. The ministry pointed out that only seven South Korean companies have stakes in overseas container terminals. They include HMM, which has interests in six terminals including Long Beach, Tacoma, Singapore and Algeciras; CJ Logistics, with facilities in Shenyang in northern China, Klang in Malaysia, and Thailand; and Lotte Global Logistics, which has warehouses in Vietnam, the Philippines and Europe. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

South Korea will invest $3 billion to expand the country's global terminals and logistics network to help strengthen trade efforts in an increasingly challenging business environment. A three-point plan unveiled by the country’s Ocean and Fisheries Ministry Monday involves increasing the number of publicly supported logistics facilities in other countries from nine to 40, securing investment in 10 overseas port terminals, and helping to develop three major logistics companies by 2030. Priority will be given to investing in storage and processing facilities, including warehouses and container yards in 11 existing target markets that include the US, Canada, Mexico, Vietnam, Indonesia, Thailand, Germany and Poland. The 11 were chosen based on the volume of import and export trade with South Korea over the past 10 years. "Securing overseas logistics bases is a key task for stabilizing the supply chain in an uncertain logistics environment," Vice Minister of Oceans and Fisheries Kim Seong-beom said in a statement announcing the initiative. “...We will strengthen our logistics competitiveness and firmly support the import and export economy." Most of the investment will be overseen by the government-backed Korea Ocean Business Corporation (KOBC). The plan calls for the creation of a foreign terminal investment group involving KOBC, shipping companies, logistics operators and port authorities such as Busan that will assess potential terminal targets and develop expansion strategies. Also part of the proposal is the creation of a container terminal investment fund that will be given $670 million to secure stakes in foreign terminals “and use this as a springboard to secure terminal operation rights in the future,” the ministry said. Cash available through KOBC’s Global Logistics Supply Chain Investment Fund will double to $1.3 billion to help small and medium-sized logistics companies expand overseas. Shift in global trade environment The investment plan was developed amid growing alarm that South Korea is losing out in the trade stakes due to the lack of investment by South Korean companies in overseas logistics facilities. "Due to changes in the global trade environment represented by tariff hikes, the protracted Russia-Ukraine war, the Red Sea conflict, and the intensification of the climate crisis, supply chain instability has been increasing in the global logistics market in recent years,” the ministry said. “As a result, logistics companies and shipping companies in various countries are strengthening their market dominance by securing logistics infrastructure and acquiring container terminals.” Only 9% of the overseas logistics centers operated by 15 of South Korea’s top companies are owned facilities, the rest are leased, the ministry said. ”There is a high risk of disruption in the provision of logistics services due to the rapid rise in logistics costs and difficulty in securing facilities at the right time in the event of a supply chain crisis,” it said. The ministry pointed out that only seven South Korean companies have stakes in overseas container terminals. They include HMM, which has interests in six terminals including Long Beach, Tacoma, Singapore and Algeciras; CJ Logistics, with facilities in Shenyang in northern China, Klang in Malaysia, and Thailand; and Lotte Global Logistics, which has warehouses in Vietnam, the Philippines and Europe. Contact Keith Wallis at keithwallis@hotmail.com .

Port News

International ports

Maritime

South Korea to invest $3 billion expanding foreign logistics, terminal network

<div class="phx-topic abstract-wrapper">ONE and SM Line are ocean carrier partners to Union Pacific on the West Coast, and a majority of UP’s international intermodal volume originates at the Port of Los Angeles. </div>

ONE and SM Line are ocean carrier partners to Union Pacific on the West Coast, and a majority of UP’s international intermodal volume originates at the Port of Los Angeles.

<div class="phx-topic">Union Pacific Railroad (UP) has received support from the Port of Los Angeles and ocean carriers Ocean Network Express (ONE) and SM Lines for its proposed acquisition of Norfolk Southern Railway (NS), with the parties citing faster transit times, potential new business opportunities and reduced drayage costs for international intermodal freight. ONE and SM Line are ocean carrier partners to Union Pacific on the West Coast, and a majority of UP’s international intermodal volume originates at the Port of Los Angeles. All three provided letters of support for the $85 billion acquisition that were included in the <a href="https://www.joc.com/article/up-in-merger-filing-vows-to-convert-millions-of-loads-to-intermodal-annually-6138380">nearly 7,000-page application</a> UP filed Friday with the US Surface Transportation Board, which needs to approve the merger. “The merger has the potential to remove several days delay from existing transit times,” wrote Tim Walsh, ONE’s senior vice president of product and network in the US. “The resulting improvement in continuity of service and transit times will enhance ONE’s ability to reliably serve our existing customers and expand our capacity to serve US customers that require faster, more dependable cargo transportation.” SM Line said the combined railroad would enable intermodal service for shippers that do not currently use rail, while POLA emphasized the implications for US exporters. “The unified network expands the reach and speed-to-market for American exports ... thereby reinforcing the Port of Los Angeles’ role in driving national economic growth,” wrote Gene Seroka, the port’s executive director. A primary benefit for international intermodal is reducing the need for long-haul and cross-town truck drayage. UP estimates that approximately 67,000 long-haul drays could be eliminated annually if the merger with NS is approved. The estimate includes three regional dray moves that would disappear: Chicago to Detroit and Toledo, Ohio — ranging from 230 to 290 miles — and Memphis to Huntsville, Alabama, nearly 215 miles. UP estimates that $112.8 million in annual long-haul drayage costs incurred by shippers would be eliminated. While UP does not break out international versus domestic intermodal in its estimate, the issue is more pronounced for ocean containers. Truckload pricing often makes it difficult to win domestic intermodal freight that requires drays of 200 miles or more. By contrast, many beneficial cargo owners (BCOs) prefer long-haul drays to avoid added handling and potential cargo damage during transloading. “The post-merger addition of single-line service linking terminals closer to the freight could result in 100% of this traffic switching to an extended haul,” David Hunt and Matthew Schabas of Oliver Wyman, a consultancy firm hired by UP to analyze the transaction, wrote in the application. “Shippers would benefit from reducing drayage miles and, as a result, their door-to-door cost per shipment.” The analysis did not include Louisville, Kentucky, despite Union Pacific and Norfolk Southern announcing a <a href="https://www.joc.com/article/up-ns-joint-intermodal-service-to-link-west-coast-with-louisville-in-midwest-6080692">joint service</a> to the city earlier this year. While the service was marketed as a domestic intermodal product, ocean containers are often interspersed within longer domestic intermodal trains. Union Pacific does not expect a sharp surge in Louisville traffic. The application states that annual lift capacity in Louisville currently stands at 140,000 units and would rise to 145,000 units following the merger — an increase of 3.6%. By contrast, UP projects lift capacity to increase 17% to 227,000 units annually in Toledo and surge 50% to 219,000 units annually in Detroit. <h3>Cross-town drayage reductions </h3>The formal merger application also projects a significant reduction in cross-town drayage within Chicago. In 2023, UP and NS said an average of 1,139 containers per day were interchanged between the railroads, including via trucks and a third-party switching railroad known as the Belt Railway of Chicago. Both options can add a day or more to the transit times on containers. The merger should eliminate more than 500 crosstown drays, known as “rubber tire” interchanges, per day, or more than 100,000 hauls on Chicago’s roadways annually. Across the US, the application identifies 82 specific intermodal routes where containers will stay on the rail for the entire journey but today require a cross-town dray between two terminals. “Intermodal companies currently tasked with trucking their containers between UP and NS intermodal yards in Chicago, Kansas City, St. Louis and Memphis will finally be able to leave their trailers and containers on railcars for the entirety of the move,” Scott Harris, chief commercial officer of drayage provider CAD Logistics, wrote in the application. “This time and cost savings will help US intermodal traffic grow over the next decade.” UP and NS estimate that approximately 250,000 annual rail lifts across Chicago, Kansas City, St. Louis and Memphis currently dedicated to cross-town drayage would be eliminated, saving about $12 million per year and freeing crane capacity to load and unload other containers more efficiently. The merger would not eliminate all cross-town drayage, however. Chicago hosts six Class I railroads, while Memphis has five and Kansas City four, meaning terminal-to-terminal drayage will remain necessary. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Union Pacific Railroad (UP) has received support from the Port of Los Angeles and ocean carriers Ocean Network Express (ONE) and SM Lines for its proposed acquisition of Norfolk Southern Railway (NS), with the parties citing faster transit times, potential new business opportunities and reduced drayage costs for international intermodal freight. ONE and SM Line are ocean carrier partners to Union Pacific on the West Coast, and a majority of UP’s international intermodal volume originates at the Port of Los Angeles. All three provided letters of support for the $85 billion acquisition that were included in the nearly 7,000-page application UP filed Friday with the US Surface Transportation Board, which needs to approve the merger. “The merger has the potential to remove several days delay from existing transit times,” wrote Tim Walsh, ONE’s senior vice president of product and network in the US. “The resulting improvement in continuity of service and transit times will enhance ONE’s ability to reliably serve our existing customers and expand our capacity to serve US customers that require faster, more dependable cargo transportation.” SM Line said the combined railroad would enable intermodal service for shippers that do not currently use rail, while POLA emphasized the implications for US exporters. “The unified network expands the reach and speed-to-market for American exports ... thereby reinforcing the Port of Los Angeles’ role in driving national economic growth,” wrote Gene Seroka, the port’s executive director. A primary benefit for international intermodal is reducing the need for long-haul and cross-town truck drayage. UP estimates that approximately 67,000 long-haul drays could be eliminated annually if the merger with NS is approved. The estimate includes three regional dray moves that would disappear: Chicago to Detroit and Toledo, Ohio — ranging from 230 to 290 miles — and Memphis to Huntsville, Alabama, nearly 215 miles. UP estimates that $112.8 million in annual long-haul drayage costs incurred by shippers would be eliminated. While UP does not break out international versus domestic intermodal in its estimate, the issue is more pronounced for ocean containers. Truckload pricing often makes it difficult to win domestic intermodal freight that requires drays of 200 miles or more. By contrast, many beneficial cargo owners (BCOs) prefer long-haul drays to avoid added handling and potential cargo damage during transloading. “The post-merger addition of single-line service linking terminals closer to the freight could result in 100% of this traffic switching to an extended haul,” David Hunt and Matthew Schabas of Oliver Wyman, a consultancy firm hired by UP to analyze the transaction, wrote in the application. “Shippers would benefit from reducing drayage miles and, as a result, their door-to-door cost per shipment.” The analysis did not include Louisville, Kentucky, despite Union Pacific and Norfolk Southern announcing a joint service to the city earlier this year. While the service was marketed as a domestic intermodal product, ocean containers are often interspersed within longer domestic intermodal trains. Union Pacific does not expect a sharp surge in Louisville traffic. The application states that annual lift capacity in Louisville currently stands at 140,000 units and would rise to 145,000 units following the merger — an increase of 3.6%. By contrast, UP projects lift capacity to increase 17% to 227,000 units annually in Toledo and surge 50% to 219,000 units annually in Detroit. Cross-town drayage reductions The formal merger application also projects a significant reduction in cross-town drayage within Chicago. In 2023, UP and NS said an average of 1,139 containers per day were interchanged between the railroads, including via trucks and a third-party switching railroad known as the Belt Railway of Chicago. Both options can add a day or more to the transit times on containers. The merger should eliminate more than 500 crosstown drays, known as “rubber tire” interchanges, per day, or more than 100,000 hauls on Chicago’s roadways annually. Across the US, the application identifies 82 specific intermodal routes where containers will stay on the rail for the entire journey but today require a cross-town dray between two terminals. “Intermodal companies currently tasked with trucking their containers between UP and NS intermodal yards in Chicago, Kansas City, St. Louis and Memphis will finally be able to leave their trailers and containers on railcars for the entirety of the move,” Scott Harris, chief commercial officer of drayage provider CAD Logistics, wrote in the application. “This time and cost savings will help US intermodal traffic grow over the next decade.” UP and NS estimate that approximately 250,000 annual rail lifts across Chicago, Kansas City, St. Louis and Memphis currently dedicated to cross-town drayage would be eliminated, saving about $12 million per year and freeing crane capacity to load and unload other containers more efficiently. The merger would not eliminate all cross-town drayage, however. Chicago hosts six Class I railroads, while Memphis has five and Kansas City four, meaning terminal-to-terminal drayage will remain necessary. Contact Ari Ashe at ari.ashe@spglobal.com .

Rail News

North-American rail

Carriers, POLA back UP-NS deal, citing lower transit times, costs

<div class="phx-topic abstract-wrapper">The pause on work at five major offshore wind farms along the US East Coast is likely to have an impact on heavy-lift and project cargoes supporting the installations. </div>

The pause on work at five major offshore wind farms along the US East Coast is likely to have an impact on heavy-lift and project cargoes supporting the installations.

<div class="phx-topic">The US Department of the Interior on Monday suspended the leases of five major offshore wind power projects along the East Coast due to what it says are “national security risks.” The affected projects, all assisted by leasing and tax credit provisions in the 2022 Inflation Reduction Act, are operated by Vineyard Wind 1, Revolution Wind, Coastal Virginia Offshore Wind (CVOW), Sunrise Wind, and Empire Wind 1. “Today’s action addresses emerging national security risks, including the rapid evolution of the relevant adversary technologies, and the vulnerabilities created by large-scale offshore wind projects with proximity near our East Coast population centers,” Interior Secretary Doug Burgum said. In an interview with Fox Business Monday, Burgum said the projects create “radar interference” and a “jamming risk.” <h3>Trump a long-time foe of wind projects </h3>The pausing of the five wind energy projects is likely to impact project cargo shipments; wind farms are a major source of project cargo. The Port of Virginia, for example, said in October it was seeing <a href="https://www.joc.com/article/wind-cargo-helps-virginia-port-lay-groundwork-for-more-heavy-lift-business-6102932">increasing heavy-lift demand</a> because of the now-curtailed CVOW project. President Donald Trump has made no secret of his desire to move the US away from wind projects in favor of building more oil and gas pipelines. “Unclassified reports from the US government have long found that the movement of massive turbine blades and the highly reflective towers create radar interference called ‘clutter,’” the Department of the Interior said in its statement Monday. “The clutter caused by offshore wind projects obscures legitimate moving targets and generates false targets in the vicinity of the wind projects.” Interior cited a 2024 US Department of Energy report that a radar’s threshold for false alarm detection can be increased to reduce some clutter, but an increased detection threshold could cause the radar to “miss actual targets.” Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

The US Department of the Interior on Monday suspended the leases of five major offshore wind power projects along the East Coast due to what it says are “national security risks.” The affected projects, all assisted by leasing and tax credit provisions in the 2022 Inflation Reduction Act, are operated by Vineyard Wind 1, Revolution Wind, Coastal Virginia Offshore Wind (CVOW), Sunrise Wind, and Empire Wind 1. “Today’s action addresses emerging national security risks, including the rapid evolution of the relevant adversary technologies, and the vulnerabilities created by large-scale offshore wind projects with proximity near our East Coast population centers,” Interior Secretary Doug Burgum said. In an interview with Fox Business Monday, Burgum said the projects create “radar interference” and a “jamming risk.” Trump a long-time foe of wind projects The pausing of the five wind energy projects is likely to impact project cargo shipments; wind farms are a major source of project cargo. The Port of Virginia, for example, said in October it was seeing increasing heavy-lift demand because of the now-curtailed CVOW project. President Donald Trump has made no secret of his desire to move the US away from wind projects in favor of building more oil and gas pipelines. “Unclassified reports from the US government have long found that the movement of massive turbine blades and the highly reflective towers create radar interference called ‘clutter,’” the Department of the Interior said in its statement Monday. “The clutter caused by offshore wind projects obscures legitimate moving targets and generates false targets in the vicinity of the wind projects.” Interior cited a 2024 US Department of Energy report that a radar’s threshold for false alarm detection can be increased to reduce some clutter, but an increased detection threshold could cause the radar to “miss actual targets.” Contact Eric Johnson at eric.johnson@spglobal.com .

Energy projects

Heavy-haul transport

Breakbulk News

Trump administration suspends wind energy projects over ‘national security’ threat

<div class="phx-topic abstract-wrapper">Widening global overcapacity and import volume forecasts warning of weak volume growth will embolden cargo owners to attempt to secure more favorable fine print in their contracts on key service issues.</div>

Widening global overcapacity and import volume forecasts warning of weak volume growth will embolden cargo owners to attempt to secure more favorable fine print in their contracts on key service issues.

<div class="phx-topic">US importers who will ink annual Asia-US service contracts in the new year are confident enough of their market power in the weakening trade that rates could take a back seat to service-related issues in their coming negotiations with ocean carriers, sources say. Widening global overcapacity and import volume forecasts warning of weak volume growth will embolden cargo owners to attempt to secure more favorable fine print in their 2026–27 contracts on key service issues such as schedule reliability and flexibility in handling contracted allocations, according to sources. For most beneficial cargo owners (BCOs), addressing nettlesome service issues, some of which have been around for years, will be the main focus of BCOs when contract negotiations kick into high gear this spring, said David Bennett, an industry adviser who has dealt with service issues as both a carrier and forwarder executive. “That’s where the conversation needs to go,” Bennett told the Journal of Commerce. Most service contracts in the largest US trade lane generally run from May 1 through April 30 of the following year. The largest retailers who are able to negotiate the lowest contract rates due to their large volumes normally set the pricing floor for midsize retailers and other importers. The big-box retailers usually wrap up their agreements in January and February. Midsize and smaller importers do most of their bargaining after the annual Journal of Commerce TPM Conference in early March in Long Beach. <h3>MQCs in the spotlight </h3>Importers, consultants and forwarders say that with low single-digit growth in container volumes projected in 2026, this will be the year to fine-tune service-related clauses in their contracts, especially those issues that can have a monetary impact. Chief among these is the minimum quantity commitment (MQC) that importers agree to for the life of the contract. The higher the MQC, the lower the fixed rate. Most carriers calculate the fixed rate by taking the total MQC and dividing it by 52. That means the importer is expected to meet its allocation each week, whether it’s at the height of the peak shipping season each fall or during slack seasons such as during the Lunar New Year or post-peak season months. Industry consultant Bob Fredman, who formerly negotiated service contracts for big-box retailers, said he had a clause in his contracts that allowed the importer to exceed the MQC in peak weeks by 20% and still retain the lower fixed rate on those containers. A carrier executive source explained that the MQC mechanism is a tool that carriers use to manage their capacity during peak periods and limit their exposure to unused capacity when the market heads south. He agreed, though, that some retailers have had agreements with their regular customers for years that allow them to exceed their weekly allocation by 10% to 20% during peak periods. A more recent development that is driven by <a href="https://www.joc.com/article/surging-southeast-asia-volumes-strain-intra-asia-capacity-6078465">the migration of sourcing from China to Southeast Asia and the Indian sub-continent</a> due to US tariffs is that some carriers are not providing sufficient capacity from load ports in those regions. The carrier executive said Haiphong, Vietnam, is booming with increased manufacturing, but carrier service levels have not kept up with the growth. An importer in the automotive sector said he is experiencing that issue. “As our business continues to grow and we have had to shift production due to the Trump tariffs, our focus is more around [securing sufficient] MQC out of new ports,” the source said. “[So far] we have been able to get space beyond existing contract volumes due to the soft market, but certain ports are tighter than others.” BCOs in 2026 want greater predictability of capacity deployments from carriers so they will have visibility into their freight spend as they negotiate their service contracts, said James Caradonna, executive vice president at the forwarder Spedag Americas. If market demand drops steeply and carriers increase their blank sailings or suspend vessel strings, Caradonna said his clients may find they are not receiving the allocations at fixed rates that they were guaranteed in their MQC commitments. “They don’t want to go off-contract to get space,” he said. <a href="https://www.joc.com/article/maersk-takes-significant-step-toward-return-to-red-sea-transits-6138361">If carriers return to the Suez Canal in 2026</a> as some lines indicate may happen, and the <a href="https://www.joc.com/article/easing-container-tonnage-delivery-in-2026-belies-signs-of-saturation-6136817">delivery of new container ships from shipyards meets forecasts</a>, spot and freight-all-kinds (FAK) rates charged by forwarders would likely drop below the fixed rates in service contracts given the influx of capacity, a second carrier executive said. BCOs would then look to shift more of their business to the lower FAK rates charged by forwarders, he said. “Those BCOs who feel 2026 will be a year when supply exceeds demand, they will go where they can save money,” the source said. “It’s the nature of the business.” <h3>Spot rates to influence negotiations </h3>As usual, spot rates that are in effect each spring set the tone for service contract negotiations, and retailers and BCOs anticipate that weak rates will be in place this spring, strengthening their bargaining power. Industry adviser Kevin Parkerson, who previously negotiated service contracts for large retailers, said he doesn’t expect the market to strengthen much, if at all, during the next three months, which will bolster BCOs’ negotiating position insofar as the fixed rates in their service contracts. “Retailers are feeling good,” Parkerson said. “Carriers definitely don’t feel too good.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a71889-00bc-46ce-97f0-58e270f5dace"></dynamic-object></div>The spot rate from Asia to the US West Coast as of Dec. 18 was $2,474 per FEU, according to data from Drewry, with the East Coast rate at $3,293 per FEU. In mid-March 2025 with the 2025–26 service contract talks in full steam, rates to the West Coast were $2,906 per FEU, while East Coast rates were at $4,038 per FEU. Several forwarders and industry analysts said they expect the final service contract rates that will be negotiated this spring <a href="https://www.joc.com/article/trans-pacific-capacity-cuts-on-the-rise-as-carriers-look-to-stem-rate-slide-6086815">will resemble the rates in the current 2025–26 contracts</a>, which for the largest retailers were in the range of $1,500 to $1,600 per FEU to the West Coast and about $1,000 higher to the East Coast. For midsize retailers, the negotiated price to the West Coast was about $1,800 to $1,900 per FEU. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. </div>

US importers who will ink annual Asia-US service contracts in the new year are confident enough of their market power in the weakening trade that rates could take a back seat to service-related issues in their coming negotiations with ocean carriers, sources say. Widening global overcapacity and import volume forecasts warning of weak volume growth will embolden cargo owners to attempt to secure more favorable fine print in their 2026–27 contracts on key service issues such as schedule reliability and flexibility in handling contracted allocations, according to sources. For most beneficial cargo owners (BCOs), addressing nettlesome service issues, some of which have been around for years, will be the main focus of BCOs when contract negotiations kick into high gear this spring, said David Bennett, an industry adviser who has dealt with service issues as both a carrier and forwarder executive. “That’s where the conversation needs to go,” Bennett told the Journal of Commerce. Most service contracts in the largest US trade lane generally run from May 1 through April 30 of the following year. The largest retailers who are able to negotiate the lowest contract rates due to their large volumes normally set the pricing floor for midsize retailers and other importers. The big-box retailers usually wrap up their agreements in January and February. Midsize and smaller importers do most of their bargaining after the annual Journal of Commerce TPM Conference in early March in Long Beach. MQCs in the spotlight Importers, consultants and forwarders say that with low single-digit growth in container volumes projected in 2026, this will be the year to fine-tune service-related clauses in their contracts, especially those issues that can have a monetary impact. Chief among these is the minimum quantity commitment (MQC) that importers agree to for the life of the contract. The higher the MQC, the lower the fixed rate. Most carriers calculate the fixed rate by taking the total MQC and dividing it by 52. That means the importer is expected to meet its allocation each week, whether it’s at the height of the peak shipping season each fall or during slack seasons such as during the Lunar New Year or post-peak season months. Industry consultant Bob Fredman, who formerly negotiated service contracts for big-box retailers, said he had a clause in his contracts that allowed the importer to exceed the MQC in peak weeks by 20% and still retain the lower fixed rate on those containers. A carrier executive source explained that the MQC mechanism is a tool that carriers use to manage their capacity during peak periods and limit their exposure to unused capacity when the market heads south. He agreed, though, that some retailers have had agreements with their regular customers for years that allow them to exceed their weekly allocation by 10% to 20% during peak periods. A more recent development that is driven by the migration of sourcing from China to Southeast Asia and the Indian sub-continent due to US tariffs is that some carriers are not providing sufficient capacity from load ports in those regions. The carrier executive said Haiphong, Vietnam, is booming with increased manufacturing, but carrier service levels have not kept up with the growth. An importer in the automotive sector said he is experiencing that issue. “As our business continues to grow and we have had to shift production due to the Trump tariffs, our focus is more around [securing sufficient] MQC out of new ports,” the source said. “[So far] we have been able to get space beyond existing contract volumes due to the soft market, but certain ports are tighter than others.” BCOs in 2026 want greater predictability of capacity deployments from carriers so they will have visibility into their freight spend as they negotiate their service contracts, said James Caradonna, executive vice president at the forwarder Spedag Americas. If market demand drops steeply and carriers increase their blank sailings or suspend vessel strings, Caradonna said his clients may find they are not receiving the allocations at fixed rates that they were guaranteed in their MQC commitments. “They don’t want to go off-contract to get space,” he said. If carriers return to the Suez Canal in 2026 as some lines indicate may happen, and the delivery of new container ships from shipyards meets forecasts , spot and freight-all-kinds (FAK) rates charged by forwarders would likely drop below the fixed rates in service contracts given the influx of capacity, a second carrier executive said. BCOs would then look to shift more of their business to the lower FAK rates charged by forwarders, he said. “Those BCOs who feel 2026 will be a year when supply exceeds demand, they will go where they can save money,” the source said. “It’s the nature of the business.” Spot rates to influence negotiations As usual, spot rates that are in effect each spring set the tone for service contract negotiations, and retailers and BCOs anticipate that weak rates will be in place this spring, strengthening their bargaining power. Industry adviser Kevin Parkerson, who previously negotiated service contracts for large retailers, said he doesn’t expect the market to strengthen much, if at all, during the next three months, which will bolster BCOs’ negotiating position insofar as the fixed rates in their service contracts. “Retailers are feeling good,” Parkerson said. “Carriers definitely don’t feel too good.” The spot rate from Asia to the US West Coast as of Dec. 18 was $2,474 per FEU, according to data from Drewry, with the East Coast rate at $3,293 per FEU. In mid-March 2025 with the 2025–26 service contract talks in full steam, rates to the West Coast were $2,906 per FEU, while East Coast rates were at $4,038 per FEU. Several forwarders and industry analysts said they expect the final service contract rates that will be negotiated this spring will resemble the rates in the current 2025–26 contracts , which for the largest retailers were in the range of $1,500 to $1,600 per FEU to the West Coast and about $1,000 higher to the East Coast. For midsize retailers, the negotiated price to the West Coast was about $1,800 to $1,900 per FEU. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Container lines

Trans-Atlantic

Container Shipping News

Service-related issues to take center stage in 2026–27 ocean contract talks: sources

<div class="phx-topic abstract-wrapper">The agreement will result in a reduction of an estimated 25,000 metric tons of CO2-equivalent well-to-wake emissions for ocean freight transported under DHL’s “GoGreen Plus” initiative.</div>

The agreement will result in a reduction of an estimated 25,000 metric tons of CO2-equivalent well-to-wake emissions for ocean freight transported under DHL’s “GoGreen Plus” initiative.

<div class="phx-topic">DHL Global Forwarding has become the latest CMA CGM customer to sign a biofuel deal with the French carrier, with an agreement for the joint use of 8,990 metric tons of recycled waste cooking oil. The move will result in a reduction of an estimated 25,000 metric tons of CO2-equivalent well-to-wake emissions for ocean freight transported under DHL’s GoGreen Plus initiative, the companies said in a joint statement Monday. The GoGreen Plus service enables customers to cut well-to-wake emissions by selecting sustainable marine fuel options for their transport, allowing reductions of up to 80% of greenhouse gas emissions compared with conventional maritime fuel, DHL said. The deal is also part of CMA CGM’s ACT+ program that enables customers to reduce the carbon footprint of their shipments by 10%, 25%, 50%, or 83% on a well-to-wake basis, using low-carbon fuels such as waste-derived biofuels. “This collaboration marks another milestone in our mission towards low-carbon supply chains,” said Casper Ellerbaek, DHL Global Forwarding’s head of global energy freight. “By leveraging sustainable marine fuels, we help our customers achieve their climate goals and drive real progress toward decarbonization,” Ellerbaek added. <h3>Prior CMA CGM deals with Nestlé, Nike </h3>DHL said CMA CGM will physically bunker the biofuel across its fleet, ensuring that emission reductions correspond to DHL’s “book and claim approach.” That enables the forwarder to directly replace fossil fuels with sustainable fuels within its network while also allocating the environmental benefits to paying customers to help those customers’ own reporting of emissions and decarbonization targets. The DHL tie-up follows similar deals CMA CGM has made with its customers over the last two years. That includes an agreement with Nestlé under which 100% of its CMA CGM volumes are transported using biofuel produced from organic waste that generates 84% fewer carbon emissions. Nike also inked a year-long agreement with CMA CGM to use biofuel to transport 36% of its volumes. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

DHL Global Forwarding has become the latest CMA CGM customer to sign a biofuel deal with the French carrier, with an agreement for the joint use of 8,990 metric tons of recycled waste cooking oil. The move will result in a reduction of an estimated 25,000 metric tons of CO2-equivalent well-to-wake emissions for ocean freight transported under DHL’s GoGreen Plus initiative, the companies said in a joint statement Monday. The GoGreen Plus service enables customers to cut well-to-wake emissions by selecting sustainable marine fuel options for their transport, allowing reductions of up to 80% of greenhouse gas emissions compared with conventional maritime fuel, DHL said. The deal is also part of CMA CGM’s ACT+ program that enables customers to reduce the carbon footprint of their shipments by 10%, 25%, 50%, or 83% on a well-to-wake basis, using low-carbon fuels such as waste-derived biofuels. “This collaboration marks another milestone in our mission towards low-carbon supply chains,” said Casper Ellerbaek, DHL Global Forwarding’s head of global energy freight. “By leveraging sustainable marine fuels, we help our customers achieve their climate goals and drive real progress toward decarbonization,” Ellerbaek added. Prior CMA CGM deals with Nestlé, Nike DHL said CMA CGM will physically bunker the biofuel across its fleet, ensuring that emission reductions correspond to DHL’s “book and claim approach.” That enables the forwarder to directly replace fossil fuels with sustainable fuels within its network while also allocating the environmental benefits to paying customers to help those customers’ own reporting of emissions and decarbonization targets. The DHL tie-up follows similar deals CMA CGM has made with its customers over the last two years. That includes an agreement with Nestlé under which 100% of its CMA CGM volumes are transported using biofuel produced from organic waste that generates 84% fewer carbon emissions. Nike also inked a year-long agreement with CMA CGM to use biofuel to transport 36% of its volumes. Contact Keith Wallis at keithwallis@hotmail.com .

DHL, CMA CGM unveil emissions-cutting biofuel collaboration

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