<div class="phx-topic abstract-wrapper">Although spillover cargo from the congested container market will recede as the market stabilizes, breakbulk and recovering project demand coupled with shrinking capacity are expected to keep MPV/HL rates from sinking to pre-COVID-19 levels</div>

Although spillover cargo from the congested container market will recede as the market stabilizes, breakbulk and recovering project demand coupled with shrinking capacity are expected to keep MPV/HL rates from sinking to pre-COVID-19 levels

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<div>This story appears in the print edition of the Jan. 3, 2022, Journal of Commerce Annual Review and Outlook.The tsunami of so-called spillover container cargo that transformed the 2021 project and breakbulk cargo market showed signs of plateauing — and perhaps even receding a bit from the multipurpose/heavy-lift (MPV/HL) sector — at year’s end. <div><img>l</div>Project and breakbulk shippers faced a surging carriers’ market for the first time in more than a decade during 2021 as “unboxed” breakbulk cargo and laden containers <a>flooded the MPV sector</a>. Some shippers found themselves priced out of the market, projects missed deadlines, and even shippers...

This story appears in the print edition of the Jan. 3, 2022, Journal of Commerce Annual Review and Outlook. The tsunami of so-called spillover container cargo that transformed the 2021 project and breakbulk cargo market showed signs of plateauing — and perhaps even receding a bit from the multipurpose/heavy-lift (MPV/HL) sector — at year’s end. l Project and breakbulk shippers faced a surging carriers’ market for the first time in more than a decade during 2021 as “unboxed” breakbulk cargo and laden containers flooded the MPV sector . Some shippers found themselves priced out of the market, projects missed deadlines, and even shippers willing to pay high premiums saw cargo rolled or delayed, engineering, procurement, and construction (EPC) and project forwarder logistics executives told JOC.com. To combat this uncertainty, project shippers and their forwarders are now booking MPV/HL tonnage through 2022 and in some cases into 2023 and beyond. Forward bookings also include new clients with cargo that has been taken out of containers and will move as breakbulk, one carrier executive told JOC.com. MPVs generally are not well-suited to carry more than a handful of containers; when they do, discharge is slow, documentation is complex, and many ports are reluctant to handle these ships because they take extra time and labor on the terminal side. However, the 2021 spillover phenomenon created its own weather, so to speak, thanks to container rates high enough to pull MPV/HL carriers out of their normal business practices. Click to enlarge . The volume of containerized cargo arriving in the United States on noncontainer ships jumped 42 percent year over year to 206,013 TEU during the first nine months 2021, according to data from PIERS, a sister product of JOC.com within IHS Markit. Within this category, general cargo ships were the busiest, delivering 98,130 TEU to US ports from January through September, up 82 percent from the same period in 2020 and 65 percent from 2019, before the global supply chain was upended by the COVID-19 pandemic. Although this represents a relatively minute percentage of total global container trade, the spillover phenomenon has been sufficient to temporarily distort the MPV/HL sector and allow carriers to earn rates well above operating costs for the first time in more than a decade, according to multipurpose fleet analysts Yorck Niclas Prehm of Toepfer Transport and Susan Oatway of Drewry. New emphasis on contracting In response to the risks laid bare by the pandemic-driven spillover market, project logistics contracting is evolving rapidly. Carriers are using narrowing clauses to add flexibility to laycan dates, while shippers and forwarders are discussing mechanisms such as cancellation clauses, cost-plus contracting, bunker adjustment factor (BAF)-style adjustments for rates as well as fuel, and index-based rates that are regularly recalibrated, several industry executives said. “It’s a developmental case,” an executive with a global project forwarder told JOC.com. You solve one problem with a contract clause, and a new problem arises immediately, he said. For shippers, procurement, sourcing, and supply chains are under newfound scrutiny. In addition to addressing pandemic-driven disruption, the global energy transition will eventually require project owners, EPCs, and their logistics service providers to take responsibility for their carbon footprints, one EPC logistics executive told JOC.com. Across industry sectors — oil and gas, mining, wind, steel, etc. — methods, costs, and risk allocations remain to be worked out. Click to enlarge . According to IHS Markit, parent company of JOC.com, although a few megaprojects were announced in 2021, fossil-fuel-based energy projects, a core source of traditional project cargo, will be smaller and leaner going forward. “The $10 billion, $15 billion, $20 billion projects are few and far between,” agreed one project logistics executive. “The smart thing to do is focus on smaller-scale projects that turn around within a year or two, rather than going after huge projects.” IHS Markit expects global oil and gas exploration and production (E&P) capital spending to total $338 billion in 2021, $419 billion in 2022, $459 billion in 2023, $490 billion in 2024, and $504 billion in 2025. Spending on liquefied natural gas (LNG) and pipelines is estimated at $63 billion in 2021, $60 billion in 2022, $67 billion in 2023, $69 billion in 2024, and $71 billion in 2025. On the downstream side, spending on refining and petrochemicals should be about $146 billion in 2021, $123 billion in 2022, $109 billion in 2023, $98 billion in 2024, and $102 billion in 2025. Looming capacity crunch? Even before COVID-19, carrier consolidation was reducing the number of operators with newer ships that have higher lift capacities. Ulrich Ulrichs, CEO of BBC Chartering, the largest MPV/HL operator in the segment, told JOC.com consolidation will continue until the sector consists of small, regional players and only a handful of global MPV carriers. In addition, when demand skyrocketed during the pandemic, many MPV ships were sold into regional fleets, effectively removing them from global trade, according to Justin Archard, founder and managing partner with One World Shipbrokers and founder of the Multipurpose Sentiment Index (MSI). Although there was a glimmer of MPV newbuilding interest as the year ended, according to Toepfer, activity is scarce because shipyards prefer building larger, simpler container and bulk ships to MPVs, financing is tight, prices are high, and shipowners are still wary of investing after years of sector overcapacity. With the exception of AAL’s order for four 32,000-deadweight ton (dwt) ships to be delivered starting in 2024, the newbuildings now under construction will replace rather than increase fleet capacity. At the same time, most of the current global MPV/HL fleet is not fitted to meet escalating emissions regulations and will soon begin aging out of eligibility to carry premium cargoes. Wind power cargo demand will soak up huge amounts of MPV/HL capacity for the foreseeable future, as the United States, Europe, and Asia have all announced ambitious offshore and onshore wind growth targets. The Global Wind Energy Council predicts that 399 gigawatts (GW) of onshore wind will be built globally from 2021 through 2025, while roughly 70 GW of offshore wind will be added globally to the existing 34 GW during the same period. Carrier executives and industry players warn that these factors all add up to a looming MPV/HL capacity crunch. Rates will decline from feverish spillover market levels, but thanks to forward contracting, tightening capacity, and continued demand, they are unlikely to sag back to pre-pandemic levels in 2022 or 2023, and perhaps beyond. Contact Janet Nodar at janet.nodar@ihsmarkit.com and follow her on Linked In and Twitter: @janet_nodar .

Breakbulk News

Maritime

Outlook 2022: MPV/HL demand to remain elevated despite receding container ‘spillover’

<div class="phx-topic abstract-wrapper">Rates were driven by an early peak season as shippers consigned cargo ahead of the longshore strike along the US East and Gulf coasts last week and a capacity crunch as vessels continued to divert around southern Africa.</div>

Rates were driven by an early peak season as shippers consigned cargo ahead of the longshore strike along the US East and Gulf coasts last week and a capacity crunch as vessels continued to divert around southern Africa.

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<div class="phx-topic">Taiwan’s Big Three carriers — Evergreen Marine, Yang Ming Marine Transport and Wan Hai Lines — each saw third-quarter revenues more than double from a year ago on stronger freight rates. Rates were driven by an early peak season as shippers consigned cargo ahead of the longshore strike along the US East and Gulf coasts last week and a capacity crunch as vessels continued to divert around southern Africa to avoid militant attacks in the Red Sea. Evergreen’s third-quarter revenues climbed 109% to $4.8 billion from $2.3 billion a year earlier, according to its exchange filings. Yang Ming also reported a 109% rise in Q3 revenues to $2.3 billion, while intra-Asia-focused Wan Hai saw revenues in the period surge 119% to $1.7 billion. None of the carriers provided profit figures, but full details will be given when the carriers release full quarterly results next month. The carriers have mostly seen monthly revenues steadily slide in the months since they peaked in July, their latest filings this week to the Taiwan stock exchange show. That mirrors the wider decline in container freight rates since early July, when the benchmark Shanghai Container Freight Index (SCFI) reached a high of 3,650. It has since dropped 43% to hit 2,135 on Sept. 27, the latest figure available, data from the Shanghai Shipping Exchange shows. For the nine months to Sept. 30, Evergreen Marine saw the largest rise in revenues that climbed 68% to about $11 billion, it said in its filing. Yang Ming said revenues rose 57% to $5.2 billion in the January-September period, while Wan Hai Lines posted revenues of $3.7 billion for the nine months, up 60% year over year, according to their respective corporate filings Wednesday. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Taiwan’s Big Three carriers — Evergreen Marine, Yang Ming Marine Transport and Wan Hai Lines — each saw third-quarter revenues more than double from a year ago on stronger freight rates. Rates were driven by an early peak season as shippers consigned cargo ahead of the longshore strike along the US East and Gulf coasts last week and a capacity crunch as vessels continued to divert around southern Africa to avoid militant attacks in the Red Sea. Evergreen’s third-quarter revenues climbed 109% to $4.8 billion from $2.3 billion a year earlier, according to its exchange filings. Yang Ming also reported a 109% rise in Q3 revenues to $2.3 billion, while intra-Asia-focused Wan Hai saw revenues in the period surge 119% to $1.7 billion. None of the carriers provided profit figures, but full details will be given when the carriers release full quarterly results next month. The carriers have mostly seen monthly revenues steadily slide in the months since they peaked in July, their latest filings this week to the Taiwan stock exchange show. That mirrors the wider decline in container freight rates since early July, when the benchmark Shanghai Container Freight Index (SCFI) reached a high of 3,650. It has since dropped 43% to hit 2,135 on Sept. 27, the latest figure available, data from the Shanghai Shipping Exchange shows. For the nine months to Sept. 30, Evergreen Marine saw the largest rise in revenues that climbed 68% to about $11 billion, it said in its filing. Yang Ming said revenues rose 57% to $5.2 billion in the January-September period, while Wan Hai Lines posted revenues of $3.7 billion for the nine months, up 60% year over year, according to their respective corporate filings Wednesday. Contact Keith Wallis at keithwallis@hotmail.com .

Container Shipping News

Container lines

Strong freight rates drive higher Q3 revenue for Taiwan’s ‘Big Three’ carriers

<div class="phx-topic abstract-wrapper">If ports operated by ILA labor were for decades a dependable alternative to those reliant on the ILA’s perpetually disruptive West Coast counterpart, the ILWU, that assumption no longer holds true, writes Peter Tirschwell. </div>

If ports operated by ILA labor were for decades a dependable alternative to those reliant on the ILA’s perpetually disruptive West Coast counterpart, the ILWU, that assumption no longer holds true, writes Peter Tirschwell.

<div class="phx-topic">Over several months beginning last November when the International Longshoremen’s Association (ILA) first mentioned the possibility of a strike — an innocuous reference in an unrelated press release — a realization slowly dawned on shippers that a sea change was occurring on the US East and Gulf coasts. If ports operated by ILA labor were for decades a dependable alternative to those reliant on the ILA’s perpetually disruptive West Coast counterpart, the International Longshore and Warehouse Union (ILWU), that assumption no longer holds true. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5745032_0.1.jpg"></img></div>The assumption of labor peace, demonstrated over the course of 13 peaceful contract negotiations since 1977 (the year of the last coastwide strike), was one of the key factors — along with demographic shifts and the 2016 expansion of the Panama Canal — that lead importers of goods from Asia to divert significant volumes from the West Coast to ports along the East and Gulf coasts. As every West Coast contract negotiation since the late 1990s was met with disruption on the docks and delays to cargo, the consistently peaceful waterfront along the East and Gulf coasts served as a reminder to shippers that a viable alternative to the West Coast exists, and they took advantage. The diversions were so predictable during the most recent disruptive West Coast negotiations that the Pacific Maritime Association (PMA) called it out in June 2023 in response to “coordinated and disruptive work actions” by the ILWU as the contract was being negotiated. “The ILWU’s repeated disruptive work actions at strategic ports along the West Coast are increasingly causing companies to divert cargo to more customer-friendly and reliable locations along the Gulf and East coasts,” <a href="https://www.pmanet.org/wp-content/uploads/2023/06/PMA-Update-6.9.23.pdf">the PMA said</a>. <h3>The ground has shifted </h3>The message of labor peace on the East and Gulf coasts wasn’t just an impression; at industry conferences at Savannah, Charleston and other ports, ILA dockworkers took the mic when shippers were on stage, pledging support for their cargo and promising continued reliability. Such statements would never be heard on the West Coast. Now, even though the strike <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">was suspended after three days</a> when employers increased their offer to a 62% wage increase over the term of a new six-year contract, shippers believe something more profound has changed. Just prior to the strike, Jonathan Gold, the vice president of Supply Chain and Customs Policy at the National Retail Federation, said even the threat of a work stoppage “will have an impact on the confidence that retailers have in labor stability at those ports.” “Retailers have diversified their supply chains over the years, and we expect some to re-evaluate their use of certain ports moving forward, especially for discretionary cargo,” Gold said. It wasn’t just the mounting concern about the possibility of a strike that left the impression of a changed labor landscape. The dispute over jurisdiction of crane driver and yard worker jobs at Southeast ports, which led the <a href="https://www.joc.com/article/zim-becomes-first-carrier-to-commit-to-reopened-leatherman-terminal-5735909">new Hugh K. Leatherman Terminal</a> in Charleston to be all but shut down three years after it opened in 2021, sent tremors that labor stability was no longer guaranteed. Contributing to the impression of shippers of an altered landscape on the East and Gulf coasts was how the contract negotiations played out this year, or more appropriately, didn’t. The ILA walked out of negotiations with the United States Maritime Alliance (USMX) in June and never returned to the table; even the terms of the tentative deal that ended the strike last week were mediated entirely through Biden administration officials, not face-to-face with the USMX. <h3>Permanent acrimony? </h3>For 40-plus years, the ILA and USMX resolved their issues at the bargaining table, forging a shared commitment to stability that was understood by shippers watching the relationship from the sidelines and making supply chain decisions accordingly. Thus, even for carrier executives with long experience in dealing with the ILA, the inability to return to the table despite repeated invitations — which ultimately led the USMX <a href="https://www.joc.com/article/usmx-tries-to-force-ila-back-to-contract-talks-with-nlrb-complaint-5736646">to file an unfair labor practice case with the National Labor Relations Board</a> — was wholly unfamiliar. Carriers being repeatedly demonized by union officials as “greedy” — among other adjectives — was also unfamiliar, further reinforcing the notion that the landscape had changed. Shippers are now wondering if the acrimony that has long characterized labor-management relations on the West Coast will become a permanent feature on the East and Gulf coasts as well. That possibility will be a contributing factor in internal corporate discussions over issues such as outsourcing. Certainly, the next contract negotiation will be watched much more carefully than it was in the past and likely will prompt diversions that would never have been needed in prior years. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Over several months beginning last November when the International Longshoremen’s Association (ILA) first mentioned the possibility of a strike — an innocuous reference in an unrelated press release — a realization slowly dawned on shippers that a sea change was occurring on the US East and Gulf coasts. If ports operated by ILA labor were for decades a dependable alternative to those reliant on the ILA’s perpetually disruptive West Coast counterpart, the International Longshore and Warehouse Union (ILWU), that assumption no longer holds true. The assumption of labor peace, demonstrated over the course of 13 peaceful contract negotiations since 1977 (the year of the last coastwide strike), was one of the key factors — along with demographic shifts and the 2016 expansion of the Panama Canal — that lead importers of goods from Asia to divert significant volumes from the West Coast to ports along the East and Gulf coasts. As every West Coast contract negotiation since the late 1990s was met with disruption on the docks and delays to cargo, the consistently peaceful waterfront along the East and Gulf coasts served as a reminder to shippers that a viable alternative to the West Coast exists, and they took advantage. The diversions were so predictable during the most recent disruptive West Coast negotiations that the Pacific Maritime Association (PMA) called it out in June 2023 in response to “coordinated and disruptive work actions” by the ILWU as the contract was being negotiated. “The ILWU’s repeated disruptive work actions at strategic ports along the West Coast are increasingly causing companies to divert cargo to more customer-friendly and reliable locations along the Gulf and East coasts,” the PMA said . The ground has shifted The message of labor peace on the East and Gulf coasts wasn’t just an impression; at industry conferences at Savannah, Charleston and other ports, ILA dockworkers took the mic when shippers were on stage, pledging support for their cargo and promising continued reliability. Such statements would never be heard on the West Coast. Now, even though the strike was suspended after three days when employers increased their offer to a 62% wage increase over the term of a new six-year contract, shippers believe something more profound has changed. Just prior to the strike, Jonathan Gold, the vice president of Supply Chain and Customs Policy at the National Retail Federation, said even the threat of a work stoppage “will have an impact on the confidence that retailers have in labor stability at those ports.” “Retailers have diversified their supply chains over the years, and we expect some to re-evaluate their use of certain ports moving forward, especially for discretionary cargo,” Gold said. It wasn’t just the mounting concern about the possibility of a strike that left the impression of a changed labor landscape. The dispute over jurisdiction of crane driver and yard worker jobs at Southeast ports, which led the new Hugh K. Leatherman Terminal in Charleston to be all but shut down three years after it opened in 2021, sent tremors that labor stability was no longer guaranteed. Contributing to the impression of shippers of an altered landscape on the East and Gulf coasts was how the contract negotiations played out this year, or more appropriately, didn’t. The ILA walked out of negotiations with the United States Maritime Alliance (USMX) in June and never returned to the table; even the terms of the tentative deal that ended the strike last week were mediated entirely through Biden administration officials, not face-to-face with the USMX. Permanent acrimony? For 40-plus years, the ILA and USMX resolved their issues at the bargaining table, forging a shared commitment to stability that was understood by shippers watching the relationship from the sidelines and making supply chain decisions accordingly. Thus, even for carrier executives with long experience in dealing with the ILA, the inability to return to the table despite repeated invitations — which ultimately led the USMX to file an unfair labor practice case with the National Labor Relations Board — was wholly unfamiliar. Carriers being repeatedly demonized by union officials as “greedy” — among other adjectives — was also unfamiliar, further reinforcing the notion that the landscape had changed. Shippers are now wondering if the acrimony that has long characterized labor-management relations on the West Coast will become a permanent feature on the East and Gulf coasts as well. That possibility will be a contributing factor in internal corporate discussions over issues such as outsourcing. Certainly, the next contract negotiation will be watched much more carefully than it was in the past and likely will prompt diversions that would never have been needed in prior years. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

North American ports

Marine terminals

Longshore labor

Supply chain

Brief ILA strike alters once-placid labor landscape on East, Gulf coasts

<div class="phx-topic abstract-wrapper">A 10-ship order and the acquisition of MPV carrier ForestWave will increase Spliethoff’s fleet to 155 ships by 2029. </div>

A 10-ship order and the acquisition of MPV carrier ForestWave will increase Spliethoff’s fleet to 155 ships by 2029.

<div class="phx-topic">Dutch multipurpose vessel operator (MPV) Spliethoff has strengthened its presence in the MPV sector by investing in up to 10 future-fuel-ready vessels and purchasing MPV carrier ForestWave, even as the group remains “fuel agnostic,” Max van den Berg, Spliethoff Group’s fleet performance manager, told the Journal of Commerce. The company placed a firm order for eight 28,600 deadweight metric ton (dwt) ships plus options for two extra vessels from China’s Wuhu Shipyard Co. in September. “Fuel agnostic” means Spliethoff analyzes “most [fuel] options for future MPVs,” van den Berg said. “We see that specific alternatives suit certain trades or vessel types better.” While the company has trialed biofuels, uptake has been very slow, he added. “We see that there is very little support from the market to cover the premium [price) that comes with the use of sustainable biofuels,” van den Berg said. “We hope the support from the market will pick up over time.” <h3>Riding a ForestWave </h3>Confirmation of the Wuhu ship orders followed Spliethoff’s acquisition of short-sea and Atlantic basin MPV shipping company ForestWave on Sept. 30. ForestWave operates a fleet of 30 MPVs with loading capacities between 5,000 metric tons and 12,500 metric tons that typically carry forest products, yachts, bulk and offshore-related cargoes. The ForestWave ships will increase the Spliethoff fleet to 147 vessels while the order at Wuhu Shipyard will boost the fleet to close to 155 ships, taking into consideration possible vessel disposals, a Spliethoff spokesperson told the Journal of Commerce. The takeover formalized a longstanding partnership between ForestWave, Spliethoff and subsidiary company Sevenstar Yacht Transport. ForestWave becomes the seventh subsidiary within the Spliethoff group, which includes heavy lift operator BigLift Shipping and roll-on/roll-off shipping company Bore. <h3>Largest ships in Spliethoff fleet </h3>Spliethoff said the new Wuhu-ordered ships, which it has called “L”-type, will be the largest in the operator’s fleet when delivered between January 2028 and March 2029. The ice-class ships will be equipped with five side-loaders, a cargo lift system that allows breakbulk goods to be loaded via the side of the ship, and three cranes, each with a capacity of 150 metric tons, combinable to 300 metric tons, and deadweight capacity of 28,600 metric tons. Van den Berg told the Journal of Commerce that the development and implementation of Spliethoff’s performance management system has been successful in improving the fuel efficiency of its existing ships. This involves collection of “sensor data from our fleet to optimize operations and to have proper input for assessing further fuel efficiency measures,” he said. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com.</a></div>

Dutch multipurpose vessel operator (MPV) Spliethoff has strengthened its presence in the MPV sector by investing in up to 10 future-fuel-ready vessels and purchasing MPV carrier ForestWave, even as the group remains “fuel agnostic,” Max van den Berg, Spliethoff Group’s fleet performance manager, told the Journal of Commerce. The company placed a firm order for eight 28,600 deadweight metric ton (dwt) ships plus options for two extra vessels from China’s Wuhu Shipyard Co. in September. “Fuel agnostic” means Spliethoff analyzes “most [fuel] options for future MPVs,” van den Berg said. “We see that specific alternatives suit certain trades or vessel types better.” While the company has trialed biofuels, uptake has been very slow, he added. “We see that there is very little support from the market to cover the premium [price) that comes with the use of sustainable biofuels,” van den Berg said. “We hope the support from the market will pick up over time.” Riding a ForestWave Confirmation of the Wuhu ship orders followed Spliethoff’s acquisition of short-sea and Atlantic basin MPV shipping company ForestWave on Sept. 30. ForestWave operates a fleet of 30 MPVs with loading capacities between 5,000 metric tons and 12,500 metric tons that typically carry forest products, yachts, bulk and offshore-related cargoes. The ForestWave ships will increase the Spliethoff fleet to 147 vessels while the order at Wuhu Shipyard will boost the fleet to close to 155 ships, taking into consideration possible vessel disposals, a Spliethoff spokesperson told the Journal of Commerce. The takeover formalized a longstanding partnership between ForestWave, Spliethoff and subsidiary company Sevenstar Yacht Transport. ForestWave becomes the seventh subsidiary within the Spliethoff group, which includes heavy lift operator BigLift Shipping and roll-on/roll-off shipping company Bore. Largest ships in Spliethoff fleet Spliethoff said the new Wuhu-ordered ships, which it has called “L”-type, will be the largest in the operator’s fleet when delivered between January 2028 and March 2029. The ice-class ships will be equipped with five side-loaders, a cargo lift system that allows breakbulk goods to be loaded via the side of the ship, and three cranes, each with a capacity of 150 metric tons, combinable to 300 metric tons, and deadweight capacity of 28,600 metric tons. Van den Berg told the Journal of Commerce that the development and implementation of Spliethoff’s performance management system has been successful in improving the fuel efficiency of its existing ships. This involves collection of “sensor data from our fleet to optimize operations and to have proper input for assessing further fuel efficiency measures,” he said. Contact Keith Wallis at keithwallis@hotmail.com.

Breakbulk carriers

Project cargo

‘Fuel agnostic’ Spliethoff invests in MPV fleet expansion

<div class="phx-topic abstract-wrapper">MSC’s departure from the 2M Alliance gives the world’s biggest shipping line the chance to be more operationally flexible to cater to changing supply chain demands, Soren Toft told the International Association of Ports and Harbors’ conference in Hamburg.</div>

MSC’s departure from the 2M Alliance gives the world’s biggest shipping line the chance to be more operationally flexible to cater to changing supply chain demands, Soren Toft told the International Association of Ports and Harbors’ conference in Hamburg.

<div class="phx-topic">HAMBURG — Mediterranean Shipping Co. CEO Soren Toft on Tuesday touted the future effectiveness of the standalone point-to-point network the carrier is building in the wake of its pending departure from the 2M Alliance with Maersk. Speaking at the International Association of Ports and Harbors’ (IAPH’s) World Ports Conference in Hamburg, Toft said MSC’s network approach is aligned with what he characterized as a decentralization of cargo driven by consumer demand and supplier diversification by shippers. “We have decided to [have] extensive port coverage because one of the trends we are seeing is that supply chains are changing,” he said. “They are no longer as centric within a few countries as they used to be. We see a supply chain that is going from a centric supply chain to one that is more distributed.” That, Toft added, means shippers will source from “a wider array of origin countries” so as to “not put all their eggs in one basket.” He added that MSC decided to work “alliance-free” because it has the size to do so, giving it operational flexibility and the speed to meet changes in the market. “We’ve seen two black swan events in recent years — COVID and the Red Sea,” Toft said. “I cannot predict the next one, but I want to be ready for what comes ahead.” Maersk is leaving the 2M Alliance to launch the Gemini Cooperation partnership with Hapag-Lloyd early next year. MSC, the world’s biggest shipping line, last month <a href="https://www.joc.com/article/mscs-global-scale-enables-standalone-network-coverage-5726563">unveiled its comprehensive standalone network and two slot swap agreements with the new Premier Alliance and Zim Integrated Shipping Services</a>.<h3>Port investment </h3>The site of Toft’s address to IAPH — just miles from Hapag-Lloyd’s global headquarters in Hamburg — added significance to his remarks, especially as MSC received European Commission approval Friday to finalize <a href="https://www.joc.com/article/hamburg-terminal-operator-hhla-accepts-mscs-offer-for-ownership-stake-5215671">the purchase of a 49% stake in Hamburg’s largest port operator, Hamburger Hafen and Logistik (HHLA).</a>“For the port and terminal community, that means we will call an increasing number of ports because we want to serve a broader array,” he said. Toft said MSC’s new network will call 12 ports directly in Asia and 13 destination ports in Northwest Europe. That compares with nine and seven, respectively, for the next closest competitive alliance, he said. In all, MSC will offer more than 1,900 direct port connections. In signaling that Hamburg would be a key gateway for MSC, Toft told the approximately 600 delegates at the conference that MSC’s financial interest in more than 100 ports globally allowed a level of operational control and resilience that supports the east-west network it is implementing. “We don’t just invest in ports to squeeze out financial profits,” he said. “We do it for growth, network control and operational efficiency.” But ports in general still need to make progress on efficiency gains, he added. “We have to be careful not to generalize too much, but in general, we have not seen that much progress,” Toft said. “Productivity has not increased dramatically. If I look even at our ports, it’s not like we have seen in the past five or 10 years the productivity [taking] a 20% or 30% leap upwards. We need that. We need technology, not to replace the good workers, but to enhance them and to enable growth.” Toft also called on maritime regulators to acknowledge that the shipping industry needed global regulations around fuel emissions reductions, not a patchwork of local rules that increased costs on vessel operators and ports. “What we need is true, global regulation,” he said. “We cannot live in a global world with regional or country [-specific] legislation.” Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

HAMBURG — Mediterranean Shipping Co. CEO Soren Toft on Tuesday touted the future effectiveness of the standalone point-to-point network the carrier is building in the wake of its pending departure from the 2M Alliance with Maersk. Speaking at the International Association of Ports and Harbors’ (IAPH’s) World Ports Conference in Hamburg, Toft said MSC’s network approach is aligned with what he characterized as a decentralization of cargo driven by consumer demand and supplier diversification by shippers. “We have decided to [have] extensive port coverage because one of the trends we are seeing is that supply chains are changing,” he said. “They are no longer as centric within a few countries as they used to be. We see a supply chain that is going from a centric supply chain to one that is more distributed.” That, Toft added, means shippers will source from “a wider array of origin countries” so as to “not put all their eggs in one basket.” He added that MSC decided to work “alliance-free” because it has the size to do so, giving it operational flexibility and the speed to meet changes in the market. “We’ve seen two black swan events in recent years — COVID and the Red Sea,” Toft said. “I cannot predict the next one, but I want to be ready for what comes ahead.” Maersk is leaving the 2M Alliance to launch the Gemini Cooperation partnership with Hapag-Lloyd early next year. MSC, the world’s biggest shipping line, last month unveiled its comprehensive standalone network and two slot swap agreements with the new Premier Alliance and Zim Integrated Shipping Services . Port investment The site of Toft’s address to IAPH — just miles from Hapag-Lloyd’s global headquarters in Hamburg — added significance to his remarks, especially as MSC received European Commission approval Friday to finalize the purchase of a 49% stake in Hamburg’s largest port operator, Hamburger Hafen and Logistik (HHLA). “For the port and terminal community, that means we will call an increasing number of ports because we want to serve a broader array,” he said. Toft said MSC’s new network will call 12 ports directly in Asia and 13 destination ports in Northwest Europe. That compares with nine and seven, respectively, for the next closest competitive alliance, he said. In all, MSC will offer more than 1,900 direct port connections. In signaling that Hamburg would be a key gateway for MSC, Toft told the approximately 600 delegates at the conference that MSC’s financial interest in more than 100 ports globally allowed a level of operational control and resilience that supports the east-west network it is implementing. “We don’t just invest in ports to squeeze out financial profits,” he said. “We do it for growth, network control and operational efficiency.” But ports in general still need to make progress on efficiency gains, he added. “We have to be careful not to generalize too much, but in general, we have not seen that much progress,” Toft said. “Productivity has not increased dramatically. If I look even at our ports, it’s not like we have seen in the past five or 10 years the productivity [taking] a 20% or 30% leap upwards. We need that. We need technology, not to replace the good workers, but to enhance them and to enable growth.” Toft also called on maritime regulators to acknowledge that the shipping industry needed global regulations around fuel emissions reductions, not a patchwork of local rules that increased costs on vessel operators and ports. “What we need is true, global regulation,” he said. “We cannot live in a global world with regional or country [-specific] legislation.” Contact Eric Johnson at eric.johnson@spglobal.com .

Decentralized sourcing plays into MSC’s point-to-point plans: CEO

<div class="phx-topic abstract-wrapper">Eight ports that are working toward “just-in-time” port calls provided their experiences of improving quality around vessel-terminal data sharing.</div>

Eight ports that are working toward “just-in-time” port calls provided their experiences of improving quality around vessel-terminal data sharing.

<div class="phx-topic">HAMBURG — Groups targeting the improvement of port call data released a report Wednesday with recommendations for ports on how to ramp up data quality to optimize the times ships spend at berth. The report, <a href="https://sustainableworldports.org/wp-content/uploads/IAPH_chainPORT_JIT_Study_2024.pdf">Port Call Optimization Through Data Quality</a>, was unveiled at the International Association of Ports and Harbors’ (IAPH) World Ports Conference in Hamburg. IAPH, along with chainPORT, a consortium of 15 major container hubs working on system connectivity and data sharing, produced the report with assistance from the Digital Container Shipping Association (DCSA), the Terminal Industry Committee 4.0 and the International Port Community Systems Association. Those groups met under the auspices of an IAPH committee focused on supply chain resilience in ports for the benefit of shippers. The report provides examples of how ports have improved port call data and cooperated with other ports to enable so-called “just-in-time” port calls. Minimizing the time vessels are at berth is thought to have port efficiency benefits that would ultimately translate to cost savings for shippers while also expediting access to their cargo. Port call optimization, in general, is being eyed for its environmental benefits as well, as aligning the times that a vessel is due to arrive with berth availability would cut down on excess emissions produced from waiting at anchor or speeding up to make a berthing window. “The report is based on the experience of eight [ports] that have already been going through this just-in-time port call journey,” Phanthian Zuesongdham, head of Division Port Process Solutions at the Hamburg Port Authority, said at the conference Wednesday. The ports examined in the report are all in northern Europe or North Africa and include the ports of Hamburg, Rotterdam, Valencia and Tanger Med. <h3>Driven by IMO guidelines </h3>Zuesongdham said the decisions to start just-in-time port call initiatives were made based on existing International Maritime Organization (IMO) guidelines on port call optimization, but the path to implementation was not clear. “How to really adapt to that process was a little bit challenging for them,” she said. Another challenge that she described as “cultural, and not really technical,” is the introduction of a new process into a legacy environment. “This legacy environment has its own terminology, and uses the terminologies in a specific way,” she said. “And when you’d like to adopt the new [just-in-time port call] standards from the IMO, there is a challenge in how to integrate or transfer these standard terminologies into their operations.” Zuesongdham also pointed to data management, especially around agreements covering data exchanged between vessels and terminals or between terminals in different ports. “People in the shipping industry are not working only on paper anymore,” she said. “They have exchanging schemes and systems and existing legal agreements on that data exchange. To review that or change that for all the terminals and all the stakeholders they have to engage with, from the vessel perspective, is crucial and it has to be done.” Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

HAMBURG — Groups targeting the improvement of port call data released a report Wednesday with recommendations for ports on how to ramp up data quality to optimize the times ships spend at berth. The report, Port Call Optimization Through Data Quality , was unveiled at the International Association of Ports and Harbors’ (IAPH) World Ports Conference in Hamburg. IAPH, along with chainPORT, a consortium of 15 major container hubs working on system connectivity and data sharing, produced the report with assistance from the Digital Container Shipping Association (DCSA), the Terminal Industry Committee 4.0 and the International Port Community Systems Association. Those groups met under the auspices of an IAPH committee focused on supply chain resilience in ports for the benefit of shippers. The report provides examples of how ports have improved port call data and cooperated with other ports to enable so-called “just-in-time” port calls. Minimizing the time vessels are at berth is thought to have port efficiency benefits that would ultimately translate to cost savings for shippers while also expediting access to their cargo. Port call optimization, in general, is being eyed for its environmental benefits as well, as aligning the times that a vessel is due to arrive with berth availability would cut down on excess emissions produced from waiting at anchor or speeding up to make a berthing window. “The report is based on the experience of eight [ports] that have already been going through this just-in-time port call journey,” Phanthian Zuesongdham, head of Division Port Process Solutions at the Hamburg Port Authority, said at the conference Wednesday. The ports examined in the report are all in northern Europe or North Africa and include the ports of Hamburg, Rotterdam, Valencia and Tanger Med. Driven by IMO guidelines Zuesongdham said the decisions to start just-in-time port call initiatives were made based on existing International Maritime Organization (IMO) guidelines on port call optimization, but the path to implementation was not clear. “How to really adapt to that process was a little bit challenging for them,” she said. Another challenge that she described as “cultural, and not really technical,” is the introduction of a new process into a legacy environment. “This legacy environment has its own terminology, and uses the terminologies in a specific way,” she said. “And when you’d like to adopt the new [just-in-time port call] standards from the IMO, there is a challenge in how to integrate or transfer these standard terminologies into their operations.” Zuesongdham also pointed to data management, especially around agreements covering data exchanged between vessels and terminals or between terminals in different ports. “People in the shipping industry are not working only on paper anymore,” she said. “They have exchanging schemes and systems and existing legal agreements on that data exchange. To review that or change that for all the terminals and all the stakeholders they have to engage with, from the vessel perspective, is crucial and it has to be done.” Contact Eric Johnson at eric.johnson@spglobal.com .

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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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