<div class="phx-topic abstract-wrapper">The closure of one of China’s busiest container ports will add to the lengthening vessel delays being seen on the main Asian export trade lanes, while North Europe grapples with its own congestion woes on the other end.</div>

The closure of one of China’s busiest container ports will add to the lengthening vessel delays being seen on the main Asian export trade lanes, while North Europe grapples with its own congestion woes on the other end.

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<div>Ocean schedules on the main trade lanes out of Asia are set to deteriorate further in the coming weeks following the huge explosion aboard a Yang Ming vessel Friday that closed the Chinese export hub of Ningbo. The port has been closed “until further notice,” according to Hapag-Lloyd. That will pile pressure on container shipping supply chains still struggling to catch up on disrupted schedules after Typhoon Gaemi blew through the region at the end of July. Ningbo was closed following an explosion and fire on board the 6,589-TEU YM Mobility that was berthed at Beilun phase three terminal (NBSCT)....

Ocean schedules on the main trade lanes out of Asia are set to deteriorate further in the coming weeks following the huge explosion aboard a Yang Ming vessel Friday that closed the Chinese export hub of Ningbo. The port has been closed “until further notice,” according to Hapag-Lloyd. That will pile pressure on container shipping supply chains still struggling to catch up on disrupted schedules after Typhoon Gaemi blew through the region at the end of July. Ningbo was closed following an explosion and fire on board the 6,589-TEU YM Mobility that was berthed at Beilun phase three terminal (NBSCT). The ship is deployed on a joint service called CGX by Yang Ming and Asia Gulf Express 2 (AG2) by partners Hapag-Lloyd and Ocean Network Express (ONE). “Preliminary findings suggest that an explosion occurred in a container loaded with dangerous goods on board,” Yang Ming Marine Transport said in a statement Friday. The carrier said that according to the shipper declaration, the container was a refrigerated unit being used as a substitute for a dry container without requiring power connection. “Immediate fire control measures were taken, and the situation is now under control,” the statement said, adding that all crew members were safely evacuated. A Hapag-Lloyd spokesperson told the Journal of Commerce “the situation is still unclear,” but they had been informed the port will be closed “until further notice.” “Colleagues are in touch with the terminal trying to get an overview what has happened exactly and how this incident will potentially affect the overall port operations going forward,” the spokesperson said. Delays at a time of peak demand What is clear is that the closure of one of China’s busiest container ports will add to the schedule disruption already being felt on the main Asian export trade lanes at a time of peak import demand in the US and Europe. Hapag-Lloyd said its ships were waiting up to four days to berth at Ningbo before the explosion because of bad weather, with Expeditors putting the pre-explosion dwell time at up to nine days, depending on the terminal. Berthing delays are also affecting Shanghai, Xiaman, Busan and further south in Hong Kong, Singapore and Port Klang, carriers and forwarders said Friday. Carriers have also added extra loaders to call at Hong Kong to pick up transshipment cargo unloaded early in the rotations due to delays at nearby ports, Hutchison Port Holdings Trust said. “For export shipments, the average waiting time at China’s major ports is three to seven days. It seems that has become normal,” a spokesperson for Hong Kong-based FIBS Logistics told the Journal of Commerce. Ningbo is one of the main Asian ports on several services operated by the 2M Alliance of Maersk and Mediterranean Shipping Co., which earlier this week announced rotation changes to Asia-Europe calls amid growing port congestion in both Asia and North Europe. Ship delays in Asia, combined with the longer voyages around southern Africa to avoid the Red Sea, are contributing to vessel bunching and extending the bottlenecks through to European destination ports. “As a result of the exceptional waiting time and congestion faced in North Europe, Maersk will reduce the number of North European port calls by consolidating the Antwerp eastbound and westbound call on the AE6 [service] and the Rotterdam calls between both the AE6 and AE55 onto AE55,” the carrier told customers in an advisory this week. Le Havre will be dropped from the AE7 and AE55 services and added to the AE6. Congestion a constant in North Europe Marc Meier, managing director of air and sea logistics for Europe, Middle East and Africa at Germany-based forwarder Dachser, said congestion in North Europe has been constant for the past two weeks, with Hamburg delays longer than at other hubs. “We expect it to worsen until the end of the year and are working on rerouting south German and Austrian customers through Koper [Slovenia, in the Mediterranean],” he said. A spokesperson for Hamburg’s main terminal operator HHLA said most containers were still being delivered “on the basis of the original plans,” although there have been ship delays and adjustments to shipping schedules in the past few weeks. The Hapag-Lloyd spokesperson said vessel waiting times in June and July increased after the strike action in German ports, the global IT outage in late July and low labor levels during the summer holidays. “Thus far we have been able to recover any delays through a changed rotation, speeding up ships and cut and runs [when cargo is offloaded at a different port than the one intended],” he said. Cok Vinke, managing director for intermodal operator Contargo, said congestion at Rotterdam and Antwerp has always been a factor delaying the handling of barges. “At times handling is better, at times it is worse due to a variety of reasons, but it has never gone away,” Vinke said, adding that congestion in the two ports “is here to stay.” The latest schedule reliability data from Sea-Intelligence Maritime Analysis is only available for June and shows Asia-North Europe reliability edged up 0.3 percentage points to 48.7%, with Asia-Mediterranean on-time performance improving 7.8 percentage points to 58.2% and Asia-North America up 1.6 percentage points to 66.3%. Contact Greg Knowler at greg.knowler@spglobal.com . Contact Keith Wallis at keithwallis@hotmail.com .

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Maritime

Ningbo explosion closes port, adds to worsening Asian bottlenecks

<div class="phx-topic abstract-wrapper">The US maritime regulator sees no reason to block the new vessel-sharing alliance run by Maersk and Hapag-Lloyd, but the agency’s head still has concerns about the deal.</div>

The US maritime regulator sees no reason to block the new vessel-sharing alliance run by Maersk and Hapag-Lloyd, but the agency’s head still has concerns about the deal.

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<div class="phx-topic">The US Federal Maritime Commission (FMC) has signed off on the Maersk/Hapag-Lloyd vessel-sharing alliance that will start early next year, but the agency’s chief warned the ocean carriers they will be watched for how they treat US shippers. Separately, the Gemini Cooperation’s two partners laid out details on how their network will operate should the Red Sea crisis continue indefinitely. The FMC said Monday it will not seek to block Gemini, <a href="https://www.joc.com/article/maersk-hapag-lloyd-launch-new-gemini-cooperation-partnership-5225857">Maersk and Hapag-Lloyd’s new vessel-sharing agreement for trades between the US, Asia, Europe and the Middle East</a>, allowing the agreement to go into immediate effect after its filing with the FMC. Gemini’s actual services are set to debut in February 2025. The FMC asked the two companies in July to provide extra details about how Gemini would work due to <a href="https://www.joc.com/article/fmc-wants-maersk-hapag-lloyd-to-provide-more-details-on-gemini-alliance-5192298">concerns about the anti-competitive effect of the second- and fifth-largest ocean carriers by capacity pooling their vessels</a>. While it found no anti-competitive issues, the FMC said Gemini “will be subject to extensive commission monitoring.” FMC Chairman Daniel Maffei went further, though, saying in a separate statement Monday that despite the agency’s decision, he still has “questions and concerns” about Gemini’s potential effect on shippers. While the statutory time for Gemini’s review is over, he reiterated the agency’s call about ongoing oversight of the new alliance. “I have questions and concerns about whether the Gemini Cooperation agreement filed with the FMC has, or will, result in anti-competitive consequences that violate the [US] Shipping Act,” Maffei said. “I have joined my colleagues in ordering FMC staff to engage in immediate and ongoing rigorous monitoring of the Gemini Cooperation agreement to ensure that it doesn’t illegally impact US importers, exporters, covered service providers and consumers.” <h2>Suez and Cape routes planned </h2>Meanwhile, Maersk and Hapag-Lloyd sought to assure shippers that they would have the capacity in place needed for Gemini’s start. The new alliance relies on a hub-and-spoke model where large ships make fewer calls to avoid delays and bottlenecks at major ports. Smaller “shuttle” ships cover other port pairs, bringing cargo to Gemini’s main hubs. But the diversion of ships away from the Suez Canal due to ongoing militant attacks on commercial vessels in the Red Sea and Gulf of Aden has tightened ship capacity and increased transit times globally. <a href="https://www.joc.com/article/geminis-hub-and-spoke-model-aims-to-eliminate-blank-sailings-hapag-lloyd-5241030">Gemini’s partners have pledged that their hub-and-spoke model could achieve 90% schedule reliability</a>. If the Suez Canal reopens by early next year, Gemini’s partners said they will deploy 300 ships totaling 3.4 million TEUs in capacity. But if it remains closed well into 2025, Maersk and Hapag-Lloyd said they plan to deploy 340 vessels in the Gemini network totaling 3.7 million TEUs in capacity. Gemini will also offer one less Asia-US East Coast service if its ships continue transiting the Cape of Good Hope in southern Africa. The carriers said there is “currently no indication that we can expect the situation in the Red Sea to get better or resolved in the short term.” Yet they said they could still phase in Suez transits in time for Gemini’s service debut. “We will return to the Red Sea as soon as it is safe to do so, but as the situation remains highly dynamic, we will be prepared for either scenario – a return to the Red Sea, or a continuation of the alternative route south of the Cape of Good Hope,” Maersk said in a statement. Contact Michael Angell at <a href="michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The US Federal Maritime Commission (FMC) has signed off on the Maersk/Hapag-Lloyd vessel-sharing alliance that will start early next year, but the agency’s chief warned the ocean carriers they will be watched for how they treat US shippers. Separately, the Gemini Cooperation’s two partners laid out details on how their network will operate should the Red Sea crisis continue indefinitely. The FMC said Monday it will not seek to block Gemini, Maersk and Hapag-Lloyd’s new vessel-sharing agreement for trades between the US, Asia, Europe and the Middle East , allowing the agreement to go into immediate effect after its filing with the FMC. Gemini’s actual services are set to debut in February 2025. The FMC asked the two companies in July to provide extra details about how Gemini would work due to concerns about the anti-competitive effect of the second- and fifth-largest ocean carriers by capacity pooling their vessels . While it found no anti-competitive issues, the FMC said Gemini “will be subject to extensive commission monitoring.” FMC Chairman Daniel Maffei went further, though, saying in a separate statement Monday that despite the agency’s decision, he still has “questions and concerns” about Gemini’s potential effect on shippers. While the statutory time for Gemini’s review is over, he reiterated the agency’s call about ongoing oversight of the new alliance. “I have questions and concerns about whether the Gemini Cooperation agreement filed with the FMC has, or will, result in anti-competitive consequences that violate the [US] Shipping Act,” Maffei said. “I have joined my colleagues in ordering FMC staff to engage in immediate and ongoing rigorous monitoring of the Gemini Cooperation agreement to ensure that it doesn’t illegally impact US importers, exporters, covered service providers and consumers.” Suez and Cape routes planned Meanwhile, Maersk and Hapag-Lloyd sought to assure shippers that they would have the capacity in place needed for Gemini’s start. The new alliance relies on a hub-and-spoke model where large ships make fewer calls to avoid delays and bottlenecks at major ports. Smaller “shuttle” ships cover other port pairs, bringing cargo to Gemini’s main hubs. But the diversion of ships away from the Suez Canal due to ongoing militant attacks on commercial vessels in the Red Sea and Gulf of Aden has tightened ship capacity and increased transit times globally. Gemini’s partners have pledged that their hub-and-spoke model could achieve 90% schedule reliability . If the Suez Canal reopens by early next year, Gemini’s partners said they will deploy 300 ships totaling 3.4 million TEUs in capacity. But if it remains closed well into 2025, Maersk and Hapag-Lloyd said they plan to deploy 340 vessels in the Gemini network totaling 3.7 million TEUs in capacity. Gemini will also offer one less Asia-US East Coast service if its ships continue transiting the Cape of Good Hope in southern Africa. The carriers said there is “currently no indication that we can expect the situation in the Red Sea to get better or resolved in the short term.” Yet they said they could still phase in Suez transits in time for Gemini’s service debut. “We will return to the Red Sea as soon as it is safe to do so, but as the situation remains highly dynamic, we will be prepared for either scenario – a return to the Red Sea, or a continuation of the alternative route south of the Cape of Good Hope,” Maersk said in a statement. Contact Michael Angell at michael.angell@spglobal.com .

Transport, Trade and Regulation News

FMC won’t block Gemini alliance, but vows tight monitoring

<div class="phx-topic abstract-wrapper">Most of the investment will be allocated to expanding the container shipping division that aims to grow to 130 ships in the next five years. </div>

Most of the investment will be allocated to expanding the container shipping division that aims to grow to 130 ships in the next five years.

<div class="phx-topic">HMM will spend $17.5 billion over the next five years – more than half of that investment on new container ships and equipment – as the carrier on Tuesday put a price to the massive mid-to long-term strategic plan <a href="https://www.joc.com/article/hmm-unveils-ambitious-plan-to-double-container-fleet-capacity-by-2030-5241007">announced back in April.</a>The South Korean flagship will spend $9.5 billion on 70 new container ships and container equipment with the “sustainable growth plan” covering its container, bulk and logistics segments with a target of achieving net-zero emissions across operations by 2045. “We remain committed to developing a resilient business portfolio and positioning ourselves as a global leader in eco-friendly shipping for the future,” Kim Kyung Bae, HMM president and CEO, said in a statement. HMM’s newbuilding plan will take the carrier’s fleet to 130 vessels by 2030 that it said would “prepare for the reorganization of global shipping alliances and strengthen the core business’s competitiveness.” “To meet the market's demand for eco-friendly transportation, HMM aims to acquire around 70 green vessels by 2030 and establish a carbon-neutral ecosystem across all transportation segments by 2045,” the HMM statement said, adding that $1.3 billion of the investment in container shipping will be spent on new equipment. HMM remains a highly profitable carrier, <a href="https://www.joc.com/article/hmm-reports-soaring-profitability-but-warns-of-growing-market-challenges-5703223">with first-half operating profitability up 125% year over year</a> at $770 million as the carrier saw average rate levels up 55% year over year, the highest among the ocean carriers. HMM plans to allocate $3.1 billion to shipping and logistics infrastructure and will extend existing terminals and acquire additional terminals to accommodate the growing capacity. In its 2045 net-zero goal, HMM will spend $750 million on retrofitting ship engines, securing a supply chain for green fuels and improving operational stability and efficiency through digitalization. HMM, currently ranked the world’s eighth-largest container line by capacity, has an in-service fleet totaling 829,426 TEUs, with another 251,427 TEUs on order, according to Sea-web, a sister product of the Journal of Commerce within S&amp;P Global. <a href="https://www.joc.com/article/most-newbuild-capacity-headed-asia-europe-amid-ongoing-diversions_20240715.html">The carrier deployed seven 13,000-TEU ships from Asia to the US West and East coasts in the first half</a> and will bring another five vessels of the same capacity online in the second half. Contact Greg Knowler at greg.knowler@spglobal.com. </div>

HMM will spend $17.5 billion over the next five years – more than half of that investment on new container ships and equipment – as the carrier on Tuesday put a price to the massive mid-to long-term strategic plan announced back in April. The South Korean flagship will spend $9.5 billion on 70 new container ships and container equipment with the “sustainable growth plan” covering its container, bulk and logistics segments with a target of achieving net-zero emissions across operations by 2045. “We remain committed to developing a resilient business portfolio and positioning ourselves as a global leader in eco-friendly shipping for the future,” Kim Kyung Bae, HMM president and CEO, said in a statement. HMM’s newbuilding plan will take the carrier’s fleet to 130 vessels by 2030 that it said would “prepare for the reorganization of global shipping alliances and strengthen the core business’s competitiveness.” “To meet the market's demand for eco-friendly transportation, HMM aims to acquire around 70 green vessels by 2030 and establish a carbon-neutral ecosystem across all transportation segments by 2045,” the HMM statement said, adding that $1.3 billion of the investment in container shipping will be spent on new equipment. HMM remains a highly profitable carrier, with first-half operating profitability up 125% year over year at $770 million as the carrier saw average rate levels up 55% year over year, the highest among the ocean carriers. HMM plans to allocate $3.1 billion to shipping and logistics infrastructure and will extend existing terminals and acquire additional terminals to accommodate the growing capacity. In its 2045 net-zero goal, HMM will spend $750 million on retrofitting ship engines, securing a supply chain for green fuels and improving operational stability and efficiency through digitalization. HMM, currently ranked the world’s eighth-largest container line by capacity, has an in-service fleet totaling 829,426 TEUs, with another 251,427 TEUs on order, according to Sea-web, a sister product of the Journal of Commerce within S&P Global. The carrier deployed seven 13,000-TEU ships from Asia to the US West and East coasts in the first half and will bring another five vessels of the same capacity online in the second half. Contact Greg Knowler at greg.knowler@spglobal.com.

HMM to spend $17.5 billion on fleet, equipment by 2030

<div class="phx-topic abstract-wrapper">Shipper-paid spot truckload rates out of Southern California rose 6 cents per mile in August from July, despite the national shipper-paid spot rate average falling 6 cents during the same period.</div>

Shipper-paid spot truckload rates out of Southern California rose 6 cents per mile in August from July, despite the national shipper-paid spot rate average falling 6 cents during the same period.

<div class="phx-topic">As cargo from Southern California ports moves further inland, demand for trucks and intermodal rail capacity is surging in the region, driving up prices across all modes of surface transportation. Shipper-paid spot truckload rates out of Southern California rose 6 cents per mile in August from July, despite the national shipper-paid spot rate average falling 6 cents during the same period, according to a Journal of Commerce analysis of data from Cargo Chief, DAT Freight and Analytics, Sunset Transportation, and digital broker Loadsmart. Shippers paid $2.80 per mile, including fuel, on average in August on one-off spot hauls originating in Southern California, according to the Journal of Commerce analysis. This was the first time the spot price out of the region went up between July and August since 2022. Last August, the average shipper paid $2.61 per mile on the same freight lanes. Truckload spot rates typically drop from July to August because the push to sell merchandise between Memorial Day and July 4th is over and goods for Halloween, Thanksgiving, and December holidays don’t ship until after Labor Day. Shippers paid $2.34 per mile on average across the US in August, down from $2.40 in July. <h3>Loads up 20% from year ago </h3>There are several factors that could explain why outbound rates from Southern California climbed while national rates fell, including the inland flow of imports on trains and trucks. “If you look at California outbound, loads are up 20% year over year and rates are up between 8% and 9%, which is extraordinary in this market given the national rates,” said Dean Croke, principal analyst at DAT Freight &amp; Analytics. “I was waiting for this to happen when the import numbers took off in May and ocean capacity tightened. I didn’t think it would take so long to work through the domestic supply chain, but we’re seeing the peak season earlier than normal.” Intermodal demand has also increased in Southern California, prompting private asset-owners like Hub Group, J.B. Hunt Transport Services, Schneider National, STG Logistics, and Swift Intermodal to assess surcharges on select shippers exceeding the volume in their contracts. Union Pacific Railroad also <a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=&amp;ved=2ahUKEwix_rzY0riIAxURMVkFHZkVKDMQFnoECBIQAQ&amp;url=https%3A%2F%2Fwww.joc.com%2Farticle%2Fup-joins-peers-in-assessing-peak-season-surcharges-for-southern-california-5709819&amp;usg=AOvVaw3JkR6sEKGNZxlJ1uCdeyAY&amp;opi=89978449">instituted a fee</a> of $300 on high-volume shippers and $500 on low-volume shippers who exceed their contractual allotments. Some shippers might find that trucking rates are comparable or cheaper than intermodal on excess loads subject to the surcharge. Typically, an intermodal shipper saves about $1,500 compared to truckload when shipping from Southern California to the eastern half of the US. However, if the shipper faces a $1,500 rail surcharge, that load may end up traveling by truck instead. Croke said demand and rates may also cool off before the holiday season because capacity on ocean vessels has loosened since May. There are also other factors influencing truck rates in California that have no nexus to port volume or rail, including an <a href="https://www.joc.com/article/california-clean-air-rules-imperil-potential-la-lb-port-relief-valve-5713662">increasing dissatisfaction</a> with operating in the state because of regulations. “There is less long-haul capacity in California, or carriers wanting to come into California, and with even stricter regulations from the Environmental Protection Agency in 2027, it’s becoming too expensive for some of these smaller fleets to keep operating in the state,” Croke said. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a></div>

As cargo from Southern California ports moves further inland, demand for trucks and intermodal rail capacity is surging in the region, driving up prices across all modes of surface transportation. Shipper-paid spot truckload rates out of Southern California rose 6 cents per mile in August from July, despite the national shipper-paid spot rate average falling 6 cents during the same period, according to a Journal of Commerce analysis of data from Cargo Chief, DAT Freight and Analytics, Sunset Transportation, and digital broker Loadsmart. Shippers paid $2.80 per mile, including fuel, on average in August on one-off spot hauls originating in Southern California, according to the Journal of Commerce analysis. This was the first time the spot price out of the region went up between July and August since 2022. Last August, the average shipper paid $2.61 per mile on the same freight lanes. Truckload spot rates typically drop from July to August because the push to sell merchandise between Memorial Day and July 4th is over and goods for Halloween, Thanksgiving, and December holidays don’t ship until after Labor Day. Shippers paid $2.34 per mile on average across the US in August, down from $2.40 in July. Loads up 20% from year ago There are several factors that could explain why outbound rates from Southern California climbed while national rates fell, including the inland flow of imports on trains and trucks. “If you look at California outbound, loads are up 20% year over year and rates are up between 8% and 9%, which is extraordinary in this market given the national rates,” said Dean Croke, principal analyst at DAT Freight & Analytics. “I was waiting for this to happen when the import numbers took off in May and ocean capacity tightened. I didn’t think it would take so long to work through the domestic supply chain, but we’re seeing the peak season earlier than normal.” Intermodal demand has also increased in Southern California, prompting private asset-owners like Hub Group, J.B. Hunt Transport Services, Schneider National, STG Logistics, and Swift Intermodal to assess surcharges on select shippers exceeding the volume in their contracts. Union Pacific Railroad also instituted a fee of $300 on high-volume shippers and $500 on low-volume shippers who exceed their contractual allotments. Some shippers might find that trucking rates are comparable or cheaper than intermodal on excess loads subject to the surcharge. Typically, an intermodal shipper saves about $1,500 compared to truckload when shipping from Southern California to the eastern half of the US. However, if the shipper faces a $1,500 rail surcharge, that load may end up traveling by truck instead. Croke said demand and rates may also cool off before the holiday season because capacity on ocean vessels has loosened since May. There are also other factors influencing truck rates in California that have no nexus to port volume or rail, including an increasing dissatisfaction with operating in the state because of regulations. “There is less long-haul capacity in California, or carriers wanting to come into California, and with even stricter regulations from the Environmental Protection Agency in 2027, it’s becoming too expensive for some of these smaller fleets to keep operating in the state,” Croke said. Contact Ari Ashe at ari.ashe@spglobal.com

Truckload

Import surge pushing Los Angeles outbound spot truck rates higher

<div class="phx-topic abstract-wrapper">Spot rates from Asia to the US East Coast are dropping faster than in past years as carriers route discretionary shipments to the West Coast to avoid getting caught up in a threatened dockworker strike on the East and Gulf coasts.</div>

Spot rates from Asia to the US East Coast are dropping faster than in past years as carriers route discretionary shipments to the West Coast to avoid getting caught up in a threatened dockworker strike on the East and Gulf coasts.

<div class="phx-topic">A front-loading of shipments ahead of a threatened port strike threat, coupled with intensified rate pressures, is sending Asia container spot rates to the East Coast plunging faster than usual on the trade lane. Container spot rates from Asia to the US East and Gulf coasts fell $2,300 per FEU this week, much faster than in past years, as peak-season shipments on all-water services drop off and retailers, fearing a dockworker strike on the East and Gulf coasts on Oct. 1, shift discretionary cargo to the West Coast. Furthermore, carriers this year are utilizing special or “bullet” rates to compete for cargo in what has become a slowing market from Asia to the East Coast. “It’s the bullet rates that are driving behavior,” a carrier executive speaking anonymously told the Journal of Commerce Monday. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div>The East Coast spot rate paid by importers and the freight all kinds (FAK) rate paid by forwarders dropped to $6,200 per FEU from $8,500 last week, according to Platts, a Journal of Commerce sister company within S&amp;P Global. “Now the carriers are willing to wheel and deal,” Jon Monroe, who serves as an advisor to non-vessel-operating common carriers (NVOs), told the Journal of Commerce Monday. Monroe said some carriers, concerned about excess capacity emerging later this year, are approaching certain customers about locking these new rates into service contracts that would run through April 30, 2025. Many of the 2025–26 service contracts in the eastbound trans-Pacific will take effect on May 1 next year. Normally about 60% of the imports in the eastbound trans-Pacific <a href="https://www.joc.com/article/trans-pacific-rate-push-tests-health-of-early-peak-season-5704825">move under lower-cost contract rates</a>, although when space is tight, that percentage can drop as low as 45%. West Coast spot/FAK rates dropped $600 per FEU to $4,800, according to Platts. However, West Coast rates could stabilize or even move higher in the coming weeks as retailers ship holiday merchandise on the shorter trans-Pacific routings to the West Coast and retailers react to growing International Longshoremen’s Association (ILA) strike threats. “West Coast rates definitely could go up depending upon what goes on with the ILA,” Monroe said. In the past two years, East Coast spot rates by mid-September dropped by about $1,000 per FEU from late August, which marks the end of the traditional peak season to the East Coast. In 2021, when the US economy was recovering from COVID, spot rates increased by about $1,000 from late August. <h3>Bullet rates, new capacity, drive rates lower </h3>However, this year carriers have been offering a <a href="https://www.joc.com/article/capacity-boost-on-trans-pacific-pushes-carriers-to-compete-for-cargo-5711329">plethora of special rates</a> — bullet rates, commodity rates, voyage-specific rates and blended rates to secure business in what has become a highly competitive market in the trans-Pacific. “It’s so chaotic. Everyone keeps chasing the lower rates,” a second carrier executive told the Journal of Commerce Friday. Carriers last month signaled their intention to compete fiercely for business this peak season through their bullet rates to the West Coast, and now these special rates are flooding the East Coast trade lanes. “It’s nothing unexpected. We were already seeing signs of carriers not being able to hold the rates. Bullet discounts were already there,” said Christian Sur, executive vice president ocean freight/contract logistics at the NVO Unique Logistics International. Carriers this year launched or reinstated 10 services from Asia to the West Coast and have deployed dozens of “extra-loader” vessels in the trade. Except for smaller importers and NVOs, most shippers in the trans-Pacific have access to special rates that are offered by the large alliance carriers and discounted rates offered by the smaller non-alliance carriers. Although carriers did not enter any new services to the East Coast, retailers front-loaded holiday merchandise in June and July as the threat of an ILA strike intensified. Another NVO, speaking anonymously, said several carriers as of last week had posted bullet rates from Asia to the East Coast of $5,500 to $5,800 per FEU. West Coast bullet rates were in the range of $4,400 to $4,900 per FEU. Retailers forecast that US imports in September will be especially strong, increasing 14% over September 2023. Imports in October are forecast to be up 1.3% year over year, according to the Global Port Tracker released Monday by the National Retail Federation and Hackett Associates. October was the busiest month of 2023. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.</div>

A front-loading of shipments ahead of a threatened port strike threat, coupled with intensified rate pressures, is sending Asia container spot rates to the East Coast plunging faster than usual on the trade lane. Container spot rates from Asia to the US East and Gulf coasts fell $2,300 per FEU this week, much faster than in past years, as peak-season shipments on all-water services drop off and retailers, fearing a dockworker strike on the East and Gulf coasts on Oct. 1, shift discretionary cargo to the West Coast. Furthermore, carriers this year are utilizing special or “bullet” rates to compete for cargo in what has become a slowing market from Asia to the East Coast. “It’s the bullet rates that are driving behavior,” a carrier executive speaking anonymously told the Journal of Commerce Monday. The East Coast spot rate paid by importers and the freight all kinds (FAK) rate paid by forwarders dropped to $6,200 per FEU from $8,500 last week, according to Platts, a Journal of Commerce sister company within S&P Global. “Now the carriers are willing to wheel and deal,” Jon Monroe, who serves as an advisor to non-vessel-operating common carriers (NVOs), told the Journal of Commerce Monday. Monroe said some carriers, concerned about excess capacity emerging later this year, are approaching certain customers about locking these new rates into service contracts that would run through April 30, 2025. Many of the 2025–26 service contracts in the eastbound trans-Pacific will take effect on May 1 next year. Normally about 60% of the imports in the eastbound trans-Pacific move under lower-cost contract rates , although when space is tight, that percentage can drop as low as 45%. West Coast spot/FAK rates dropped $600 per FEU to $4,800, according to Platts. However, West Coast rates could stabilize or even move higher in the coming weeks as retailers ship holiday merchandise on the shorter trans-Pacific routings to the West Coast and retailers react to growing International Longshoremen’s Association (ILA) strike threats. “West Coast rates definitely could go up depending upon what goes on with the ILA,” Monroe said. In the past two years, East Coast spot rates by mid-September dropped by about $1,000 per FEU from late August, which marks the end of the traditional peak season to the East Coast. In 2021, when the US economy was recovering from COVID, spot rates increased by about $1,000 from late August. Bullet rates, new capacity, drive rates lower However, this year carriers have been offering a plethora of special rates — bullet rates, commodity rates, voyage-specific rates and blended rates to secure business in what has become a highly competitive market in the trans-Pacific. “It’s so chaotic. Everyone keeps chasing the lower rates,” a second carrier executive told the Journal of Commerce Friday. Carriers last month signaled their intention to compete fiercely for business this peak season through their bullet rates to the West Coast, and now these special rates are flooding the East Coast trade lanes. “It’s nothing unexpected. We were already seeing signs of carriers not being able to hold the rates. Bullet discounts were already there,” said Christian Sur, executive vice president ocean freight/contract logistics at the NVO Unique Logistics International. Carriers this year launched or reinstated 10 services from Asia to the West Coast and have deployed dozens of “extra-loader” vessels in the trade. Except for smaller importers and NVOs, most shippers in the trans-Pacific have access to special rates that are offered by the large alliance carriers and discounted rates offered by the smaller non-alliance carriers. Although carriers did not enter any new services to the East Coast, retailers front-loaded holiday merchandise in June and July as the threat of an ILA strike intensified. Another NVO, speaking anonymously, said several carriers as of last week had posted bullet rates from Asia to the East Coast of $5,500 to $5,800 per FEU. West Coast bullet rates were in the range of $4,400 to $4,900 per FEU. Retailers forecast that US imports in September will be especially strong, increasing 14% over September 2023. Imports in October are forecast to be up 1.3% year over year, according to the Global Port Tracker released Monday by the National Retail Federation and Hackett Associates. October was the busiest month of 2023. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Trans-Atlantic

East Coast spot rates plunge as peak-season imports shift to West Coast

<div class="phx-topic abstract-wrapper">East and Gulf coast maritime employers laid out their terms for signing a new contract with longshore workers, but they warned the ‘signal’ to strike is clear. </div>

East and Gulf coast maritime employers laid out their terms for signing a new contract with longshore workers, but they warned the ‘signal’ to strike is clear.

<div class="phx-topic">Ocean carriers and marine terminal operators are calling on the International Longshoremen’s Association (ILA) to reopen contract talks, saying their latest offer aims to avert a strike across East and Gulf Coast ports. Despite this, maritime employers also signaled pessimism about avoiding a shutdown, as the union pointed to demands above what are on offer. On Friday, the United States Maritime Alliance (USMX), which represents maritime employers across East and Gulf coast ports, said it “remains committed and prepared to resume negotiations with the ILA on a new master contract before the current agreement expires and to avoid a strike” on Oct. 1, 2024. However, the ILA said in a statement Saturday that it turned down the USMX’s entry-level wage offer as inadequate, saying new workers cannot earn a decent living due to the uncertain hours of longshore work. The USMX said that its offer included “industry leading wage increases,” which it did not quantify. However, sources familiar with the talks have said that <a href="https://www.joc.com/article/ila-unmoved-by-latest-industry-leading-wage-offer-from-usmx-5703227">employers are offering a nearly 39% increase over the contract’s six-year term, or $2.50 per hour per year</a>. The ILA is said to be looking for an increase twice as large. In addition to overall wages, the USMX said it would increase entry-level wages, currently $20 per hour, for longshore workers by an unspecified amount. The USMX also pledged to increase retirement contributions and maintain existing healthcare plans. The offer also includes an extension of the current master contract’s language that bars the development of fully automated terminals and equipment and requires consulting the ILA for any implementation of semi-automation at marine terminals. Even while it laid its offer, the USMX said that the union “continues to strongly signal that <a href="https://www.joc.com/article/ila-locals-prepping-for-coordinated-strike-at-us-east-gulf-coast-ports-5721164">it has already made the decision to call a strike</a>.” “We hope the ILA will reopen dialogue and share its current contract demands so we can work together on a new deal,” the USMX said. “Our offer demonstrates a willingness by our members to reach a new deal before the end of this month.” <h2>‘We outright reject’ </h2>Maritime employers “have taken advantage of a low entry wage and a tiered progression system for 30 years,” the ILA said. “We outright reject their position on the new entry wage.” “We are at the beck and call of the ships,” the ILA said. “No ships mean no work. Our rank-and-file members are not on a salary, they work when the ships are docked at berth.” While acknowledging that the USMX offers to increase retirement benefits, the ILA specifically called for an increase in local pension benefits funded through higher container royalties on hours worked and tonnage handled. The union also called for enhanced health coverage, including the maintenance of benefits for members at risk of losing health coverage. The ILA also demanded even stricter language about automation in the new contract, calling for an outright ban on semi-automation as well. The union alleges that <a href="https://www.joc.com/article/ila-halts-talks-over-new-contract-until-maersk-apm-clarify-port-it-projects-5244243">marine terminals have been automating clerical functions and other work processes without notification</a>, violating the intent of the current contract’s workforce protections. “We don’t want any form of semi-automation or full automation,” the ILA said. “We want ironclad language, and we want the intent of that language in writing.” The union also called out terminal operators for the use of in-equipment cameras and other workplace surveillance equipment, saying such equipment is an intrusion on privacy, especially for female longshore workers. “These employers are creating a hostile work environment under the guise of safety, and we won’t stand for it,” the ILA said. Contact Michael Angell at <a href="michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

Ocean carriers and marine terminal operators are calling on the International Longshoremen’s Association (ILA) to reopen contract talks, saying their latest offer aims to avert a strike across East and Gulf Coast ports. Despite this, maritime employers also signaled pessimism about avoiding a shutdown, as the union pointed to demands above what are on offer. On Friday, the United States Maritime Alliance (USMX), which represents maritime employers across East and Gulf coast ports, said it “remains committed and prepared to resume negotiations with the ILA on a new master contract before the current agreement expires and to avoid a strike” on Oct. 1, 2024. However, the ILA said in a statement Saturday that it turned down the USMX’s entry-level wage offer as inadequate, saying new workers cannot earn a decent living due to the uncertain hours of longshore work. The USMX said that its offer included “industry leading wage increases,” which it did not quantify. However, sources familiar with the talks have said that employers are offering a nearly 39% increase over the contract’s six-year term, or $2.50 per hour per year . The ILA is said to be looking for an increase twice as large. In addition to overall wages, the USMX said it would increase entry-level wages, currently $20 per hour, for longshore workers by an unspecified amount. The USMX also pledged to increase retirement contributions and maintain existing healthcare plans. The offer also includes an extension of the current master contract’s language that bars the development of fully automated terminals and equipment and requires consulting the ILA for any implementation of semi-automation at marine terminals. Even while it laid its offer, the USMX said that the union “continues to strongly signal that it has already made the decision to call a strike .” “We hope the ILA will reopen dialogue and share its current contract demands so we can work together on a new deal,” the USMX said. “Our offer demonstrates a willingness by our members to reach a new deal before the end of this month.” ‘We outright reject’ Maritime employers “have taken advantage of a low entry wage and a tiered progression system for 30 years,” the ILA said. “We outright reject their position on the new entry wage.” “We are at the beck and call of the ships,” the ILA said. “No ships mean no work. Our rank-and-file members are not on a salary, they work when the ships are docked at berth.” While acknowledging that the USMX offers to increase retirement benefits, the ILA specifically called for an increase in local pension benefits funded through higher container royalties on hours worked and tonnage handled. The union also called for enhanced health coverage, including the maintenance of benefits for members at risk of losing health coverage. The ILA also demanded even stricter language about automation in the new contract, calling for an outright ban on semi-automation as well. The union alleges that marine terminals have been automating clerical functions and other work processes without notification , violating the intent of the current contract’s workforce protections. “We don’t want any form of semi-automation or full automation,” the ILA said. “We want ironclad language, and we want the intent of that language in writing.” The union also called out terminal operators for the use of in-equipment cameras and other workplace surveillance equipment, saying such equipment is an intrusion on privacy, especially for female longshore workers. “These employers are creating a hostile work environment under the guise of safety, and we won’t stand for it,” the ILA said. Contact Michael Angell at michael.angell@spglobal.com .

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 Port employers urge ILA to return to contract talks

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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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