<div class="phx-topic abstract-wrapper">The long-term impact of container shipping’s moment in the sun — and in the crosshairs of regulators — will come down to which of two starkly divergent versions of reality carries sway in Washington in the coming months. </div>

The long-term impact of container shipping’s moment in the sun — and in the crosshairs of regulators — will come down to which of two starkly divergent versions of reality carries sway in Washington in the coming months.

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<div>Following the spectacle of ocean container shipping being thrust into public view during the COVID-19 pandemic, thanks in no small degree to chiding from President Joe Biden, the legislative impact still lingers. The long-term impact of container shipping’s moment in the sun — and in the crosshairs of regulators — will come down to which of two starkly divergent versions of reality carries sway in Washington, DC, in the coming months.<div><img></div>Congress is <a>considering legislation to strip carriers of antitrust immunity</a> that, if passed, would likely shake up the industry structure by making it harder to operate in alliances or even...

Following the spectacle of ocean container shipping being thrust into public view during the COVID-19 pandemic, thanks in no small degree to chiding from President Joe Biden, the legislative impact still lingers. The long-term impact of container shipping’s moment in the sun — and in the crosshairs of regulators — will come down to which of two starkly divergent versions of reality carries sway in Washington, DC, in the coming months. Congress is considering legislation to strip carriers of antitrust immunity that, if passed, would likely shake up the industry structure by making it harder to operate in alliances or even vessel-sharing agreements. The debate will be framed along these lines: Are ocean carriers indeed the malevolent actors they are made out to be — “cartels” that were engaged in collusion and price gouging that jacked up freight rates and achieved historically high profits for themselves at the expense of American businesses, and by extension, consumers?   Or were the unprecedented rates and profits seen during the pandemic, however extreme they might have been, merely the result of the same forces that have always determined results in the industry, good, bad, or ugly? In other words, was this simply a case of demand exceeding supply?  But for many within the industry watching this debate play out, it’s not a question of which of the two divergent views hold the most merit. The real question is a more fundamental one: Will reality prevail over politics? Given that what is at stake is nothing less than the future structure of the industry, reality matters.   New round of consolidation?  Many believe that a loss of antitrust immunity would trigger yet another round of industry consolidation as carriers withdraw from alliances and even vessel-sharing agreements to avoid legal risk, with the fleets of second-tier carriers being too small to compete with the top-tier carriers, forcing them to merge.  In other words, real world impact would result. But ever since Biden quipped last year that he wanted to “pop” carriers for raising rates ten-fold, reality was set aside as carriers proved a convenient scapegoat for problems such as inflation that threatened the Democrats’ performance in the 2022 mid-term elections.  Not that it mattered, but the inconvenient truth was always very different and remains so today. Rates and profits spiraled upwards due to a consumer spending surge and capacity being removed from the market as ships were forced to wait for berths outside congested seaports. Of course, as soon as those conditions eased, rates promptly collapsed, falling over 90 percent in the trans-Pacific trade since last year, according to Platts, a sister product of the Journal of Commerce within S&P Global. Supply and demand drove the market up and then back down again. “While prices have risen for ocean-borne shipping, this is largely a figment of simple supply and demand economics as cargo volumes have hit unprecedented levels during the pandemic,” Greg Regen, president of the AFL-CIO Maritime Trades Department, said in a letter to the Senate last year opposing revocation of antitrust immunity. “It is not accurate to suggest that the ocean carriers have engaged in price fixing, or that agreements between carrier alliances include rate-setting schemes that would result in price increases.”  Call and response  But even the stated opposition of labor, an ally of Democrats, has not dimmed the zeal of legislators to punish ocean carriers for the pandemic disruptions. During his State of the Union address in January, Biden urged Congress to “finish the job,” going beyond last year’s Ocean Shipping Reform Act of 2022 (OSRA-22) by passing “bipartisan legislation to strengthen antitrust enforcement.”  That call was answered in late March, with Rep. Jim Costa, D-Calif., introducing legislation to do exactly that. “For far too long, foreign shipping monopolies have manipulated the ocean shipping industry and employed unfair trade practices, hurting American exporters and consumers,” Costa said in a statement following the bill’s introduction. “Collusion” is one of the practices the legislation aims to prevent.  The only problem is it’s not true. If collusion has occurred, it hasn’t been visible to the agency with the most knowledge of the industry, the US Federal Maritime Commission (FMC).  The trans-Pacific trade “is not concentrated, and the increased rates in that market are the result of an extreme spike of consumer demand … that overwhelmed the supply of ship capacity,” the FMC said in its Fact Finding 29 study release last May , which focused on the impact of COIVD-19 on containerized supply chains.  “Even after increasing our reporting and analysis, there’s no evidence” of collusion or price fixing by carrier alliances, FMC Chairman Daniel Maffei told the Journal of Commerce’s TPM22 conference last March.  If, in fact, carriers have been colluding, it’s difficult to see how it did them any good. During the two decades from 1995 to 2016, shipping lines earned low-single-digit returns on invested capital, much lower than marine terminals, freight forwarders, truckers, or railroads, according to a Capital IQ and McKinsey analysis . Inadequate profitability drove a series of mega-mergers during that time period, resulting in the 10 largest carriers controlling more than 80 percent of capacity.  Furthermore, if there were collusion, the Department of Justice presumably would have found some evidence thereof. Although the DOJ is now believed to be actively investigating again, a multi-year grand jury investigation that included an FBI raid on a Box Club meeting of carrier CEOs in 2017 failed to yield indictments and is believed to have been wound down in 2019.  If shippers were concerned about ocean carrier behavior, it was more likely focused on the impact of too much competition, in the sense that chronically low rates would impact service or lead the industry to over-consolidate, reducing competition and choice.   “There is not anticompetitive behavior in the ocean container shipping industry,” Jim Newsome, former president and CEO of the South Carolina Ports Authority, told the Journal of Commerce. “The major carriers have been well-scrutinized under European, Asian, and US regulatory regimes over the last 20 years as antitrust immunity for pricing was removed. The market will continue to define the level of rates.”  We’ll soon find out whether or not that matters.  Correction: A previous version of this story referred to Jim Newsome as president and CEO of the South Carolina Ports Authority; Barbara Melvin succeeded Newsome as president and CEO in July 2022. Contact Peter Tirschwell at peter.tirschwell@spglobal.com and follow him on Twitter:  @petertirschwell . 

Container Shipping News

Container lines

North American ports

Marine terminals

Transport, Trade and Regulation News

Latest push for US shipping reform to test regulatory appetite

<div class="phx-topic abstract-wrapper">UP’s new protection program for high-value freight comes amid heightened concerns over cargo theft in the US and will cost users $100 per container.</div>

UP’s new protection program for high-value freight comes amid heightened concerns over cargo theft in the US and will cost users $100 per container.

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<div class="phx-topic">Union Pacific Railroad (UP) will launch a new insurance program on July 1 offering shippers up to $250,000 in liability coverage against cargo theft, more than double the company’s existing protection. That additional protection, however, comes with tighter security requirements, more logistical planning, and added costs. UP’s so-called “High-Value Product” program comes amid heightened concerns over cargo theft in the US, a growing problem in the rail industry. Criminal networks have become <a href="https://www.joc.com/article/tpm25-bnsf-ceo-says-fighting-cargo-theft-requires-collective-effort-5956508">increasingly sophisticated</a>, sabotaging trains and signal systems, deploying counter-surveillance teams to detect law enforcement and drones, and obtaining insider details about the contents of individual containers, according to the Los Angeles Times. UP’s standard liability coverage is $100,000 per container. The new tier of coverage would bring the railroad in line with its chief rival, BNSF Railway, which already provides up to $250,000 in coverage for high-value goods. The enhanced coverage with UP will come at a cost — a surcharge of $100 per container. UP announced the new insurance program via a policy change posted on <a href="https://www.up.com/customers/announcements/premium/policyandprograms/PR2025-41.html">its website</a>; the railroad did not respond to a request for comment about the program from the Journal of Commerce. High-value cargo carried by railroads is often loaded in the bottom well of a double-stack train, where the container doors are positioned flush against the steel frame of the railcar and topped with another container. It is unclear, however, whether all of UP’s “High-Value Product” freight will be placed in the bottom well. <h3>Extra work for shippers </h3>To qualify for the $250,000 in coverage, shippers must use a special commodity code for high-value cargo that charges a higher per-container fee. They are also expressly prohibited from using plastic seals on their freight, and instead must use specialized high-security locks and theft-deterrent barrier seals that go around the container door. Customers must also include the pin number for the seal in the paperwork filed with UP and take digital, date-stamped photographs showing the container number, seal application and lock with its unique identification number visible. BNSF Railway does not require specialized locks and theft-deterrent seals as part of its $250,000 liability program. It charges $80 per container for the higher-cost policy. In general, while shippers and intermodal marketing companies support enhanced efforts to combat cargo theft, some have raised concerns about the logistics of reusing high-security locks and barrier seals. For instance, if a shipper sends a container from Los Angeles to Chicago using a specialized locking device, it is unclear how that hardware would be returned to Southern California for reuse, or who would bear the costs involved. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Union Pacific Railroad (UP) will launch a new insurance program on July 1 offering shippers up to $250,000 in liability coverage against cargo theft, more than double the company’s existing protection. That additional protection, however, comes with tighter security requirements, more logistical planning, and added costs. UP’s so-called “High-Value Product” program comes amid heightened concerns over cargo theft in the US, a growing problem in the rail industry. Criminal networks have become increasingly sophisticated , sabotaging trains and signal systems, deploying counter-surveillance teams to detect law enforcement and drones, and obtaining insider details about the contents of individual containers, according to the Los Angeles Times. UP’s standard liability coverage is $100,000 per container. The new tier of coverage would bring the railroad in line with its chief rival, BNSF Railway, which already provides up to $250,000 in coverage for high-value goods. The enhanced coverage with UP will come at a cost — a surcharge of $100 per container. UP announced the new insurance program via a policy change posted on its website ; the railroad did not respond to a request for comment about the program from the Journal of Commerce. High-value cargo carried by railroads is often loaded in the bottom well of a double-stack train, where the container doors are positioned flush against the steel frame of the railcar and topped with another container. It is unclear, however, whether all of UP’s “High-Value Product” freight will be placed in the bottom well. Extra work for shippers To qualify for the $250,000 in coverage, shippers must use a special commodity code for high-value cargo that charges a higher per-container fee. They are also expressly prohibited from using plastic seals on their freight, and instead must use specialized high-security locks and theft-deterrent barrier seals that go around the container door. Customers must also include the pin number for the seal in the paperwork filed with UP and take digital, date-stamped photographs showing the container number, seal application and lock with its unique identification number visible. BNSF Railway does not require specialized locks and theft-deterrent seals as part of its $250,000 liability program. It charges $80 per container for the higher-cost policy. In general, while shippers and intermodal marketing companies support enhanced efforts to combat cargo theft, some have raised concerns about the logistics of reusing high-security locks and barrier seals. For instance, if a shipper sends a container from Los Angeles to Chicago using a specialized locking device, it is unclear how that hardware would be returned to Southern California for reuse, or who would bear the costs involved. Contact Ari Ashe at ari.ashe@spglobal.com .

North-American rail

Union Pacific will offer shippers enhanced liability coverage for cargo theft

<div class="phx-topic abstract-wrapper">Economies of scale are prompting shippers to superscale project cargoes, putting pressure on carriers and forwarders. </div>

Economies of scale are prompting shippers to superscale project cargoes, putting pressure on carriers and forwarders.

<div class="phx-topic">The supersizing of conventional power cargoes is increasing project complexity and pushing the limits of available transportation, market experts say. Conventional power project cargo is changing, with both weight and size increasing, Satish Singh, CEO of Mumbai-based freight forwarder Total Movements, told the Journal of Commerce. The trend is being driven by an industry push for cost competitiveness, leading to larger power plants and “a lot of heavy, heavy stuff — heavy turbines, heavy generators, heavy boilers,” Singh said. Project cargo shippers are opting for larger packages to streamline on-site assembly, aiming to “move in 30 days compared to six months,” he added. While conventional power projects are expanding in scale, the green mandate in Europe is now a significant factor influencing demand within the continent. “Within Europe, the focus is more on renewable energy,” Tristan Boorsma of Netherlands-based project cargo forwarder NMT Projects said. “Slowly, we see that at least in Europe, the demand for conventional power cargoes is reducing.” However, Boorsma said there would be a continued need for conventional power generation in regions “where the infrastructure is not really there for renewables.” The European energy transition also requires significant upgrades to existing infrastructure, a further boon for project cargo demand. To meet this there are more transformers being moved, which are also getting heavier, Boorsma said. That surge in demand for transformers has been so profound that Iris Mullejans, managing director of Germany-based project forwarder Riedl, said transformer manufacturers cannot keep up with demand. “They are full for transformer orders through to 2030,” she told the Journal of Commerce. <h3>Road limitations restrict mode options </h3>The movement of these increasingly large project cargo components presents transportation challenges, especially in Europe. “There, we are quite limited in terms of road transportation, so we have to look at alternatives,” Boorsma said. “We have to do a lot by inland barging.” Permitting is another pain point. “The permit application within Europe is very difficult with long lead times,” he said. “Every country has different rules and regulations.” Mullejans added that European infrastructure is generally “really run down,” although she acknowledged investments in Germany and the presence of heavy lift corridors in Finland, Sweden and Iceland that “really help.” The challenge of navigating infrastructure extends beyond Europe. Juan Turner, director/owner of Argentina-based forwarder Rowners, noted that while permits in the country can be obtained online in as little as a week to 10 days, there are instances where “you have to invent and find a solution, and then it’s a completely different story.” A recurring capacity theme is the shortage of essential resources. Turner highlighted the lack of “sufficient asset capacity to meet demand in remote locations,” citing Paraguay as an example where equipment often needs to be sourced from neighboring countries. Even more critical, he stressed, is ”manpower — the drivers and all the logistics team.” Mullejans added that a lack of good engineering and engineers led her firm to employ that expertise in-house. Singh said India faces its own unique challenge. “We have a lot of coastlines, but the government hasn’t developed any seaports for industrial zones,” he said. Frequently, Total Movements has to build temporary jetties to roll up and transport project cargoes. The alternative is relying on major Indian ports that are “way too far from the project,” NMT’s Boorsma said. Contact Carly Fields at <a href="mailto:carly.fields@spglobal.com">carly.fields@spglobal.com</a>. </div>

The supersizing of conventional power cargoes is increasing project complexity and pushing the limits of available transportation, market experts say. Conventional power project cargo is changing, with both weight and size increasing, Satish Singh, CEO of Mumbai-based freight forwarder Total Movements, told the Journal of Commerce. The trend is being driven by an industry push for cost competitiveness, leading to larger power plants and “a lot of heavy, heavy stuff — heavy turbines, heavy generators, heavy boilers,” Singh said. Project cargo shippers are opting for larger packages to streamline on-site assembly, aiming to “move in 30 days compared to six months,” he added. While conventional power projects are expanding in scale, the green mandate in Europe is now a significant factor influencing demand within the continent. “Within Europe, the focus is more on renewable energy,” Tristan Boorsma of Netherlands-based project cargo forwarder NMT Projects said. “Slowly, we see that at least in Europe, the demand for conventional power cargoes is reducing.” However, Boorsma said there would be a continued need for conventional power generation in regions “where the infrastructure is not really there for renewables.” The European energy transition also requires significant upgrades to existing infrastructure, a further boon for project cargo demand. To meet this there are more transformers being moved, which are also getting heavier, Boorsma said. That surge in demand for transformers has been so profound that Iris Mullejans, managing director of Germany-based project forwarder Riedl, said transformer manufacturers cannot keep up with demand. “They are full for transformer orders through to 2030,” she told the Journal of Commerce. Road limitations restrict mode options The movement of these increasingly large project cargo components presents transportation challenges, especially in Europe. “There, we are quite limited in terms of road transportation, so we have to look at alternatives,” Boorsma said. “We have to do a lot by inland barging.” Permitting is another pain point. “The permit application within Europe is very difficult with long lead times,” he said. “Every country has different rules and regulations.” Mullejans added that European infrastructure is generally “really run down,” although she acknowledged investments in Germany and the presence of heavy lift corridors in Finland, Sweden and Iceland that “really help.” The challenge of navigating infrastructure extends beyond Europe. Juan Turner, director/owner of Argentina-based forwarder Rowners, noted that while permits in the country can be obtained online in as little as a week to 10 days, there are instances where “you have to invent and find a solution, and then it’s a completely different story.” A recurring capacity theme is the shortage of essential resources. Turner highlighted the lack of “sufficient asset capacity to meet demand in remote locations,” citing Paraguay as an example where equipment often needs to be sourced from neighboring countries. Even more critical, he stressed, is ”manpower — the drivers and all the logistics team.” Mullejans added that a lack of good engineering and engineers led her firm to employ that expertise in-house. Singh said India faces its own unique challenge. “We have a lot of coastlines, but the government hasn’t developed any seaports for industrial zones,” he said. Frequently, Total Movements has to build temporary jetties to roll up and transport project cargoes. The alternative is relying on major Indian ports that are “way too far from the project,” NMT’s Boorsma said. Contact Carly Fields at carly.fields@spglobal.com .

Maritime

Breakbulk News

Heavy-haul transport

Project cargo

Energy projects

Heavier power cargoes challenge transport, infrastructure limitations

<div class="phx-topic abstract-wrapper">Forwarders moving cargo on monthly contracts have pegged average week-to-week gains at $200 to $300 per FEU for bookings from West India to Felixstowe/London Gateway or Rotterdam. </div>

Forwarders moving cargo on monthly contracts have pegged average week-to-week gains at $200 to $300 per FEU for bookings from West India to Felixstowe/London Gateway or Rotterdam.

<div class="phx-topic">After seeing a sharp downward correction in early May with the end of Indian seasonal grape volumes, ocean rates on the India-Europe trade have ticked up in the last two weeks, according to new data obtained by the Journal of Commerce from local freight forwarders. Forwarder executives said that while westbound volumes remain somewhat flat, carriers have been able to push rates higher due mainly to issues linked to vessel capacity and equipment availability. The sources believe some mainliners have swapped larger vessels with smaller ships for Indian coverage in a strategic repositioning of capacity into the now-heated trans-Pacific trade. Forwarders moving cargo on monthly contracts have pegged average week-to-week gains at $200 to $300 per FEU for bookings from West India (Nhava Sheva/Mundra) to Felixstowe/London Gateway or Rotterdam. “Rates have been steady to slightly rising over the last two to three weeks,” said an executive at a Mumbai-based forwarding house. That uptick comes as carriers have lined up a new round of rate hikes for India-Europe loads beginning June 15, and July 1 in some cases. Expecting these attempts to work, at least partially, major carriers on the trade lane have also revised spot rates upward for late-June/early-July sailings, sources said. “Our ocean tariff rates from the Indian subcontinent to North Europe and the Mediterranean Sea will increase,” Hapag-Lloyd told customers, announcing a $1,000-per-box hike for West India. Sources have also reported sporadic difficulty securing enough empty boxes at hinterland locations in recent weeks, especially out of the southern India region. “It’s not an acute shortage situation, but empties are fewer, varying from carrier to carrier for the type of equipment under pressure,” a second forwarder told the Journal of Commerce. Additionally, CMA CGM’s premier “Epic” service on the India-Europe trade lane has declared two void calls for West India in June due to what it said were “operational constraints.” Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

After seeing a sharp downward correction in early May with the end of Indian seasonal grape volumes, ocean rates on the India-Europe trade have ticked up in the last two weeks, according to new data obtained by the Journal of Commerce from local freight forwarders. Forwarder executives said that while westbound volumes remain somewhat flat, carriers have been able to push rates higher due mainly to issues linked to vessel capacity and equipment availability. The sources believe some mainliners have swapped larger vessels with smaller ships for Indian coverage in a strategic repositioning of capacity into the now-heated trans-Pacific trade. Forwarders moving cargo on monthly contracts have pegged average week-to-week gains at $200 to $300 per FEU for bookings from West India (Nhava Sheva/Mundra) to Felixstowe/London Gateway or Rotterdam. “Rates have been steady to slightly rising over the last two to three weeks,” said an executive at a Mumbai-based forwarding house. That uptick comes as carriers have lined up a new round of rate hikes for India-Europe loads beginning June 15, and July 1 in some cases. Expecting these attempts to work, at least partially, major carriers on the trade lane have also revised spot rates upward for late-June/early-July sailings, sources said. “Our ocean tariff rates from the Indian subcontinent to North Europe and the Mediterranean Sea will increase,” Hapag-Lloyd told customers, announcing a $1,000-per-box hike for West India. Sources have also reported sporadic difficulty securing enough empty boxes at hinterland locations in recent weeks, especially out of the southern India region. “It’s not an acute shortage situation, but empties are fewer, varying from carrier to carrier for the type of equipment under pressure,” a second forwarder told the Journal of Commerce. Additionally, CMA CGM’s premier “Epic” service on the India-Europe trade lane has declared two void calls for West India in June due to what it said were “operational constraints.” Contact Bency Mathew at bencyvmathew@gmail.com .

Asia-Europe

India-Europe ocean rates rebound on space, equipment pressures

<div class="phx-topic abstract-wrapper">Sea-Intelligence said elevated freight rates are drawing small carriers to the eastbound trade lane, but the additional capacity should dwindle by mid-August. </div>

Sea-Intelligence said elevated freight rates are drawing small carriers to the eastbound trade lane, but the additional capacity should dwindle by mid-August.

<div class="phx-topic">Niche container lines are ramping up weekly capacity in the trans-Pacific at a rate similar to the surge of 2021 and 2022, drawn by the lure of strong ocean freight rates. But that capacity is expected to quickly ebb as rates ease throughout the summer, according to consultancy Sea-Intelligence Maritime Analysis. Sea-Intelligence said Thursday it expects niche ocean carriers to provide 4.6% of the weekly capacity in the trans-Pacific by the end of June. That would top the 4.5% those carriers deployed at the start of September 2021. The draw for the niche carriers is the strength in spot freight rates, Sea-Intelligence said, although those rates have <a href="https://www.joc.com/article/asia-uswc-spot-rates-weakening-as-vessel-overcapacity-takes-hold-6022847">already started to soften amid the broader injection of fresh capacity</a>. The North Asia-to-US West Coast trade lane saw spot ocean freight rates at $5,633 per FEU as of June 11, down 7% on the week, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Spot freight rates had risen threefold since bottoming out at $1,600 in late March. “During the height of the pandemic, the [Asia-North America West Coast (NAWC)] trade lane saw a slew of new entrants — carriers which had no previous footprint on Asia-NAWC and were only there to seize an opportunity that had presented itself in the form of unnaturally high freight rates,” Sea-Intelligence Chief Executive Alan Murphy said. Murphy added that capacity “is back at the level” seen during the height of the pandemic. “This means that the current market conditions are such that these new entrants feel that there is an opportunity reminiscent of the global pandemic,” he said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e8c13a3e-9f5a-412f-8741-adbf5e1a7779"></dynamic-object></div>Some niche carriers have remained in the trans-Pacific since 2022, seeking to offer regularly scheduled liner service instead of ad hoc calls. SeaLead Shipping and T.S. Lines launched <a href="https://www.joc.com/article/two-niche-ocean-carriers-team-up-in-trans-pacific-as-rates-remain-high-5703158">a jointly-operated trans-Pacific service</a> into the Port of Long Beach almost one year ago when freight rates hovered near $6,000 per FEU. Hede Shipping has also regularly offered <a href="https://www.joc.com/article/chinese-niche-carrier-to-launch-shanghai-los-angeles-expedited-service-next-week-5222119">a premium express service</a> to Los Angeles since March 2024. However, Sea-Intelligence sees the current surge in niche carrier capacity ending faster than it did during 2021–22. Sea-Intelligence data shows that weekly niche carriers will account for 3.8% of capacity by the end of July, with that amount dropping to 2.6% by mid-August. The drawdown coincides with expectations that <a href="https://www.joc.com/article/pause-in-tariff-hikes-drives-big-gains-in-trans-pacific-spot-rates-6017111">imports from Asia will peak around late summer</a> as the Trump administration’s 90-day reprieve on Chinese tariffs expires. “If history is anything to go by, we will see these carriers remove capacity as quickly as it was introduced once the market conditions start to normalize,” Murphy said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Niche container lines are ramping up weekly capacity in the trans-Pacific at a rate similar to the surge of 2021 and 2022, drawn by the lure of strong ocean freight rates. But that capacity is expected to quickly ebb as rates ease throughout the summer, according to consultancy Sea-Intelligence Maritime Analysis. Sea-Intelligence said Thursday it expects niche ocean carriers to provide 4.6% of the weekly capacity in the trans-Pacific by the end of June. That would top the 4.5% those carriers deployed at the start of September 2021. The draw for the niche carriers is the strength in spot freight rates, Sea-Intelligence said, although those rates have already started to soften amid the broader injection of fresh capacity . The North Asia-to-US West Coast trade lane saw spot ocean freight rates at $5,633 per FEU as of June 11, down 7% on the week, according to Platts, a sister company of the Journal of Commerce within S&P Global. Spot freight rates had risen threefold since bottoming out at $1,600 in late March. “During the height of the pandemic, the [Asia-North America West Coast (NAWC)] trade lane saw a slew of new entrants — carriers which had no previous footprint on Asia-NAWC and were only there to seize an opportunity that had presented itself in the form of unnaturally high freight rates,” Sea-Intelligence Chief Executive Alan Murphy said. Murphy added that capacity “is back at the level” seen during the height of the pandemic. “This means that the current market conditions are such that these new entrants feel that there is an opportunity reminiscent of the global pandemic,” he said. Some niche carriers have remained in the trans-Pacific since 2022, seeking to offer regularly scheduled liner service instead of ad hoc calls. SeaLead Shipping and T.S. Lines launched a jointly-operated trans-Pacific service into the Port of Long Beach almost one year ago when freight rates hovered near $6,000 per FEU. Hede Shipping has also regularly offered a premium express service to Los Angeles since March 2024. However, Sea-Intelligence sees the current surge in niche carrier capacity ending faster than it did during 2021–22. Sea-Intelligence data shows that weekly niche carriers will account for 3.8% of capacity by the end of July, with that amount dropping to 2.6% by mid-August. The drawdown coincides with expectations that imports from Asia will peak around late summer as the Trump administration’s 90-day reprieve on Chinese tariffs expires. “If history is anything to go by, we will see these carriers remove capacity as quickly as it was introduced once the market conditions start to normalize,” Murphy said. Contact Michael Angell at michael.angell@spglobal.com .

Trans-Pacific

June expected to be peak for niche carriers in the trans-Pacific: analyst

<div class="phx-topic abstract-wrapper">Instead of rising in May as would typically be expected, US freight volumes dropped, and that is having an impact on pricing, freight indicators reveal. </div>

Instead of rising in May as would typically be expected, US freight volumes dropped, and that is having an impact on pricing, freight indicators reveal.

<div class="phx-topic">Trucking executives may say they are <a href="https://www.joc.com/article/schneider-jb-hunt-see-us-truck-capacity-shrinking-in-h2-6023884">increasingly, if still cautiously, optimistic</a> about a recovery in their market, but the latest data on US freight demand isn’t encouraging. The monthly Cass Freight Index and the US producer price index report released Thursday show freight demand and pricing either declining or stalled on a month-to-month basis. Truck and intermodal rail shipments fell 0.4% from April to May and dropped 4% year over year, according to the shipment component of the Cass Freight Index. The 4% decline followed a 3.6% year-over-year decrease in shipments in April. The May shipment decline bucks normal seasonal trends, Cass said. Consumer spending in the first quarter, before the Trump administration introduced higher US tariffs, is still propping up freight demand, but that support is beginning to weaken. “Pre-tariff inventory stocking has started to turn to destocking, and those stocks will start to thin in the coming months,” Cass Information Systems said in its May report. A further drop in domestic freight volume is likely this month. Normal seasonality would have shipments decline by 2% year over year in June, according to Cass. On a year-over-year basis, the Cass Freight Shipments Index has been falling since February 2023. Month to month, the index rose 0.4% in April before dropping in May. Truckload rates are still rising year over year, but they have been decreasing on a consecutive monthly basis, according to the Cass Truckload Linehaul Index. In May, the truckload pricing index was up 0.6% from a year ago but down 0.8% from April. The Truckload Linehaul index, which includes spot and contract rates, dropped 1.5% from February through May. The truckload index trendline is similar, although not identical, to other indicators. The long-distance US truckload producer price index (PPI) was flat in May from April at a reading of 177.3 and up 3% from a year earlier. The PPI, released by the US Bureau of Labor Statistics Thursday, measures the total cost of a truckload shipment paid by shippers and is weighted toward contract rates. The weighted Journal of Commerce Shipper-Paid Truckload Rate rose 4 cents per mile on average in May to $2.18 per mile, although that was down from $2.21 a year earlier. The measure of all-inclusive shipper-paid dry-van pricing is down 8% from January. The US long-distance less-than-truckload (LTL) PPI shows more stability but also the impact of lower LTL volumes. The LTL PPI dropped about 1 percentage point to 258.1 in May after staying flat at about 259 for three months. However, those three months represented the highest reading for the LTL PPI in its history, with pricing up about 5% year over year. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. </div>

Trucking executives may say they are increasingly, if still cautiously, optimistic about a recovery in their market, but the latest data on US freight demand isn’t encouraging. The monthly Cass Freight Index and the US producer price index report released Thursday show freight demand and pricing either declining or stalled on a month-to-month basis. Truck and intermodal rail shipments fell 0.4% from April to May and dropped 4% year over year, according to the shipment component of the Cass Freight Index. The 4% decline followed a 3.6% year-over-year decrease in shipments in April. The May shipment decline bucks normal seasonal trends, Cass said. Consumer spending in the first quarter, before the Trump administration introduced higher US tariffs, is still propping up freight demand, but that support is beginning to weaken. “Pre-tariff inventory stocking has started to turn to destocking, and those stocks will start to thin in the coming months,” Cass Information Systems said in its May report. A further drop in domestic freight volume is likely this month. Normal seasonality would have shipments decline by 2% year over year in June, according to Cass. On a year-over-year basis, the Cass Freight Shipments Index has been falling since February 2023. Month to month, the index rose 0.4% in April before dropping in May. Truckload rates are still rising year over year, but they have been decreasing on a consecutive monthly basis, according to the Cass Truckload Linehaul Index. In May, the truckload pricing index was up 0.6% from a year ago but down 0.8% from April. The Truckload Linehaul index, which includes spot and contract rates, dropped 1.5% from February through May. The truckload index trendline is similar, although not identical, to other indicators. The long-distance US truckload producer price index (PPI) was flat in May from April at a reading of 177.3 and up 3% from a year earlier. The PPI, released by the US Bureau of Labor Statistics Thursday, measures the total cost of a truckload shipment paid by shippers and is weighted toward contract rates. The weighted Journal of Commerce Shipper-Paid Truckload Rate rose 4 cents per mile on average in May to $2.18 per mile, although that was down from $2.21 a year earlier. The measure of all-inclusive shipper-paid dry-van pricing is down 8% from January. The US long-distance less-than-truckload (LTL) PPI shows more stability but also the impact of lower LTL volumes. The LTL PPI dropped about 1 percentage point to 258.1 in May after staying flat at about 259 for three months. However, those three months represented the highest reading for the LTL PPI in its history, with pricing up about 5% year over year. Contact William B. Cassidy at bill.cassidy@spglobal.com .

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US trucking rate momentum stalls amid volume decline: Cass, PPIs

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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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Filling the Supply Chain Education Gap with LTL Education Courses

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