<div class="phx-topic abstract-wrapper">TGS Logistics said state grants for electric trucks failed to stem higher costs for new equipment amid a soft rate environment. </div>

TGS Logistics said state grants for electric trucks failed to stem higher costs for new equipment amid a soft rate environment.

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<div>A second major California-based drayage operator has closed its doors in less than a month, raising renewed concerns that the cost of the state’s green push for low and zero-emission trucks might be hastening the demise of the companies. TGS Logistics last week shut down its operations in Northern and Southern California, <a>following GSC Enterprises’ announcement</a> in mid-July that it ceased operations in the Oakland area. Robert Loya, chief operating officer at TGS, said that drayage operators in California rely upon “layered grants” from the state and from the ports of Los Angeles and Long Beach. A harbor-wide clean truck...

A second major California-based drayage operator has closed its doors in less than a month, raising renewed concerns that the cost of the state’s green push for low and zero-emission trucks might be hastening the demise of the companies. TGS Logistics last week shut down its operations in Northern and Southern California, following GSC Enterprises’ announcement in mid-July that it ceased operations in the Oakland area. Robert Loya, chief operating officer at TGS, said that drayage operators in California rely upon “layered grants” from the state and from the ports of Los Angeles and Long Beach. A harbor-wide clean truck program reimburses drayage providers partly for electric truck purchases, but much of the revenues collected through the $10-per-TEU fee on laden containers goes toward building electric charging infrastructure. Drayage operators are struggling in an environment marked by stagnating pricing while drayage operators’ costs have increased significantly. These market developments haven’t spared drayage operators in California who also face the additional cost of approximately $500,000 per zero-emission truck, said Matt Schrap, CEO of the Harbor Trucking Association. Drayage operators in California have been upgrading their fleets with clean-diesel trucks and, more recently, with the purchase of zero-emission trucks . Those purchases have “exacerbated” current market conditions, he said. The ports since 2022 together have collected about $250 million in revenue from the Clean Truck Fund (CTF) rate. The grants to individual drayage companies are made when the zero-emission vehicles are delivered. The ports continue to modify the CTF rate so that it will have a greater impact on the financial capability of drayage operators to purchase zero-emission vehicles, said Noel Hacegaba, chief operating officer of the Port of Long Beach. Bryan Brandes maritime director at the Port of Oakland, said drayage operators in California — who are already struggling with waning pricing power and increased operating costs and at the same time are purchasing clean-diesel and zero-emission vehicles — run the risk of following TGS’ fate. “TGS was trying to be a leader in the clean-truck movement,” Brandes said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Port News

Trucking News

Surface

Drayage

Second California drayage operator shuts business, cites electric truck costs

<div class="phx-topic abstract-wrapper"> It has taken several years for the IMO to get to this point, but the heavily compromised net-zero framework agreement has polarized the shipping industry. </div>

It has taken several years for the IMO to get to this point, but the heavily compromised net-zero framework agreement has polarized the shipping industry.

<div class="phx-topic">Member states of the International Maritime Organization (IMO) will go into next week’s pivotal meeting on shipping decarbonization amid deepening divisions among nations and industry groups on the most effective way forward. The primary item on the agenda at the IMO’s Marine Environment Protection Committee (MEPC) meeting in London Oct. 14–17 is the adoption of amendments to Annex VI of the MARPOL Convention. The amendments include the proposed net-zero framework, agreed in principle by a majority of IMO members in April in line with the 2023 greenhouse gas (GHG) strategy. It has taken several years for the IMO to get to this point, but the heavily compromised net-zero framework agreement has polarized the shipping industry. This week, seven shipowner associations urged member states “to make history” by approving the net-zero framework that includes the world’s first industrywide carbon pricing measure. “To deliver on the agreed upon greenhouse gas [GHG] strategy, global regulation is a precondition,” the shipowners noted in a joint statement. The associations are the Japanese Shipowners’ Association, the Royal Belgian Shipowners’ Association, the Royal Association of Netherlands Shipowners, the Singapore Shipping Association, the UK Chamber of Shipping, the Norwegian Shipowners’ Association and Danish Shipping. “It is necessary for reducing emissions, for creating homogeneous and predictable framework conditions for the shipping industry and — perhaps most importantly — sending the strongest possible signal to investors and producers to scale up the production of the alternative fuels that the shipping industry will require to move towards zero emissions,” the statement said. Opposing the adoption of the framework in its current form are Greek shipowners representing mostly the tanker and gas carrier fleet, classification societies the American Bureau of Shipping (ABS) and DNV, and, notably, the White House. US officials last month <a href="https://www.joc.com/article/us-steps-up-attempts-to-derail-imos-net-zero-ambitions-6076148">stepped up attempts to derail support</a> for the net-zero measure, threatening to impose tariffs, port duties and even visa refusals on IMO member states that support the net-zero framework. <h3>Crucial step toward climate neutrality </h3>If the IMO net-zero framework is adopted, all large ships operating globally, including cruise ships, will be required to slash emissions by 17% by 2028, with steadily increasing emission reduction targets after that, or pay a fee. Shipping currently accounts for 3% of global carbon emissions. The framework is regarded as crucial in enabling the industry to reach climate neutrality around 2050 by introducing fuel standards and levies on ships that fail to meet strict targets. It will require a two-thirds majority from member states to win approval and those voting yes will need to represent at least 50% of the world’s registered tonnage. Despite the opposing forces, Natacha Stamatiou, senior analyst for global shipping at the Environmental Defense Fund, was optimistic that the IMO framework will be adopted, although she was expecting “a dramatic week.” “The IMO has a whole book of rules of procedures, and we anticipate that some member states might raise rules and procedure points in order to delay and disrupt proceedings,” Stamatiou told the Journal of Commerce. “But that is what happened in April, so it is nothing new, and we are confident the framework will be adopted, and we can start working on the ambitious timelines,” she added. “From our perspective, the numbers look like they are leaning towards a positive vote.” Delaine McCullough, shipping program director at environmental activist Ocean Conservancy, described the framework as a major win for global climates, health and the oceans. “It’s encouraging to see an industry rally around a real, binding commitment to drastically reduce dangerous emissions,” McCullough said in a statement this week. “More will need to be done to strengthen this agreement to ensure there are no loopholes for unsustainable fuels, incentivize the rapid uptake of clean alternative fuels and distribute revenues fairly,” she added. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Member states of the International Maritime Organization (IMO) will go into next week’s pivotal meeting on shipping decarbonization amid deepening divisions among nations and industry groups on the most effective way forward. The primary item on the agenda at the IMO’s Marine Environment Protection Committee (MEPC) meeting in London Oct. 14–17 is the adoption of amendments to Annex VI of the MARPOL Convention. The amendments include the proposed net-zero framework, agreed in principle by a majority of IMO members in April in line with the 2023 greenhouse gas (GHG) strategy. It has taken several years for the IMO to get to this point, but the heavily compromised net-zero framework agreement has polarized the shipping industry. This week, seven shipowner associations urged member states “to make history” by approving the net-zero framework that includes the world’s first industrywide carbon pricing measure. “To deliver on the agreed upon greenhouse gas [GHG] strategy, global regulation is a precondition,” the shipowners noted in a joint statement. The associations are the Japanese Shipowners’ Association, the Royal Belgian Shipowners’ Association, the Royal Association of Netherlands Shipowners, the Singapore Shipping Association, the UK Chamber of Shipping, the Norwegian Shipowners’ Association and Danish Shipping. “It is necessary for reducing emissions, for creating homogeneous and predictable framework conditions for the shipping industry and — perhaps most importantly — sending the strongest possible signal to investors and producers to scale up the production of the alternative fuels that the shipping industry will require to move towards zero emissions,” the statement said. Opposing the adoption of the framework in its current form are Greek shipowners representing mostly the tanker and gas carrier fleet, classification societies the American Bureau of Shipping (ABS) and DNV, and, notably, the White House. US officials last month stepped up attempts to derail support for the net-zero measure, threatening to impose tariffs, port duties and even visa refusals on IMO member states that support the net-zero framework. Crucial step toward climate neutrality If the IMO net-zero framework is adopted, all large ships operating globally, including cruise ships, will be required to slash emissions by 17% by 2028, with steadily increasing emission reduction targets after that, or pay a fee. Shipping currently accounts for 3% of global carbon emissions. The framework is regarded as crucial in enabling the industry to reach climate neutrality around 2050 by introducing fuel standards and levies on ships that fail to meet strict targets. It will require a two-thirds majority from member states to win approval and those voting yes will need to represent at least 50% of the world’s registered tonnage. Despite the opposing forces, Natacha Stamatiou, senior analyst for global shipping at the Environmental Defense Fund, was optimistic that the IMO framework will be adopted, although she was expecting “a dramatic week.” “The IMO has a whole book of rules of procedures, and we anticipate that some member states might raise rules and procedure points in order to delay and disrupt proceedings,” Stamatiou told the Journal of Commerce. “But that is what happened in April, so it is nothing new, and we are confident the framework will be adopted, and we can start working on the ambitious timelines,” she added. “From our perspective, the numbers look like they are leaning towards a positive vote.” Delaine McCullough, shipping program director at environmental activist Ocean Conservancy, described the framework as a major win for global climates, health and the oceans. “It’s encouraging to see an industry rally around a real, binding commitment to drastically reduce dangerous emissions,” McCullough said in a statement this week. “More will need to be done to strengthen this agreement to ensure there are no loopholes for unsustainable fuels, incentivize the rapid uptake of clean alternative fuels and distribute revenues fairly,” she added. Contact Greg Knowler at greg.knowler@spglobal.com .

Transport, Trade and Regulation News

Maritime

Deep divisions linger as IMO gathers for pivotal decarbonization talks

<div class="phx-topic abstract-wrapper">The overhaul marks the latest in a series of network shakeups among North American railroads competing for international intermodal freight. </div>

The overhaul marks the latest in a series of network shakeups among North American railroads competing for international intermodal freight.

<div class="phx-topic">Norfolk Southern Railway (NS) is reshaping its international intermodal network, consolidating and reducing service between the US West Coast and several Midwest markets while expanding train capacity from East Coast ports into the Midwest. The most significant changes affect Ohio and the Upper Midwest, where the railroad will consolidate all Cincinnati-area traffic into a single large terminal in Sharonville, just north of the city. Under the new plan, international trains will interchange in Chicago and terminate in Cincinnati, no longer continuing to Cleveland or Detroit. The changes take effect Oct. 20. The decision was made to consolidate into a single terminal in Cincinnati to put ocean containers into stacks, following similar NS projects in Atlanta, Memphis and Chicago in the last two years. In the long term, ground stacking will allow Norfolk Southern to be better equipped for import surges. Meanwhile, the railroad’s decision to cancel international trains from Chicago to Cleveland and Detroit reflects low volume. Most cargo destined for Cleveland arrives at East Coast ports, or in the case of Detroit, the East Coast and Canadian ports. “We’re not trying to consolidate international traffic from [Cleveland and Detroit] through Sharonville,” Norfolk Southern said in a statement to the Journal of Commerce. “For the limited international volumes moving to/from Cleveland and Detroit, Sharonville may occasionally serve as a routing option, but it’s not being positioned as a hub for those markets.” The overhaul by NS marks the latest in a series of network shakeups among North American railroads competing for international intermodal freight. In April, BNSF Railway introduced a joint service with Norfolk Southern to move import containers from <a href="https://www.joc.com/article/bnsfs-new-seattle-to-ohio-service-avoids-chicago-dray-5203416">Seattle and Tacoma to the Ohio Valley</a> with a quick crew change in Chicago, eliminating the need to truck cargo across the city. BNSF added another inland service in July, linking Los Angeles, Long Beach and Oakland with <a href="https://www.joc.com/article/bnsf-to-use-southern-route-to-salt-lake-city-under-up-intermodal-deal-6045357">Salt Lake City</a>. In July, Union Pacific Railroad also opened a new terminal in <a href="https://www.joc.com/article/ups-kc-terminal-will-change-approach-on-ocean-cargo-6013727">Kansas City</a> and reconfigured its intermodal network to accelerate domestic and international trains from Southern California in a bid to better compete against BNSF. In September, Canadian National Railway and CSX Transportation unveiled a joint service to move containers from Western Canada <a href="https://www.joc.com/article/cn-csx-joint-service-to-connect-west-canada-and-nashville-6077903">directly to Nashville</a>, rather than depositing the cargo in Memphis and trucking it across Tennessee. <h3>Adjustment for NS shippers </h3>Cargo owners in Cleveland and Detroit will lose access to major West Coast ports unless they are willing to truck containers to Chicago or Cincinnati, but alternative options are available. Detroit shippers can redirect international volumes to the East Coast ports of New York-New Jersey and Virginia, where CSX and Norfolk Southern already operate frequent service. They can also route freight through Vancouver using Canadian National Railway, which maintains a large terminal in Detroit. Norfolk Southern, meanwhile, will replace West Coast options for those in Cleveland with new departures from the Port of New York and New Jersey. A new thrice weekly train from Port Liberty Bayonne will launch Oct. 21, the railroad announced, supplementing its existing daily train from APM’s Elizabeth Marine Terminal. Shippers in Kansas City will also see adjustments on Oct. 21. The current daily train from Elizabeth Marine Terminal will be replaced by a three-day-per-week schedule but originate from Elizabeth, Port Liberty Bayonne, and Port Liberty New York on Staten Island, offering service from more terminals despite fewer weekly departures. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

Norfolk Southern Railway (NS) is reshaping its international intermodal network, consolidating and reducing service between the US West Coast and several Midwest markets while expanding train capacity from East Coast ports into the Midwest. The most significant changes affect Ohio and the Upper Midwest, where the railroad will consolidate all Cincinnati-area traffic into a single large terminal in Sharonville, just north of the city. Under the new plan, international trains will interchange in Chicago and terminate in Cincinnati, no longer continuing to Cleveland or Detroit. The changes take effect Oct. 20. The decision was made to consolidate into a single terminal in Cincinnati to put ocean containers into stacks, following similar NS projects in Atlanta, Memphis and Chicago in the last two years. In the long term, ground stacking will allow Norfolk Southern to be better equipped for import surges. Meanwhile, the railroad’s decision to cancel international trains from Chicago to Cleveland and Detroit reflects low volume. Most cargo destined for Cleveland arrives at East Coast ports, or in the case of Detroit, the East Coast and Canadian ports. “We’re not trying to consolidate international traffic from [Cleveland and Detroit] through Sharonville,” Norfolk Southern said in a statement to the Journal of Commerce. “For the limited international volumes moving to/from Cleveland and Detroit, Sharonville may occasionally serve as a routing option, but it’s not being positioned as a hub for those markets.” The overhaul by NS marks the latest in a series of network shakeups among North American railroads competing for international intermodal freight. In April, BNSF Railway introduced a joint service with Norfolk Southern to move import containers from Seattle and Tacoma to the Ohio Valley with a quick crew change in Chicago, eliminating the need to truck cargo across the city. BNSF added another inland service in July, linking Los Angeles, Long Beach and Oakland with Salt Lake City . In July, Union Pacific Railroad also opened a new terminal in Kansas City and reconfigured its intermodal network to accelerate domestic and international trains from Southern California in a bid to better compete against BNSF. In September, Canadian National Railway and CSX Transportation unveiled a joint service to move containers from Western Canada directly to Nashville , rather than depositing the cargo in Memphis and trucking it across Tennessee. Adjustment for NS shippers Cargo owners in Cleveland and Detroit will lose access to major West Coast ports unless they are willing to truck containers to Chicago or Cincinnati, but alternative options are available. Detroit shippers can redirect international volumes to the East Coast ports of New York-New Jersey and Virginia, where CSX and Norfolk Southern already operate frequent service. They can also route freight through Vancouver using Canadian National Railway, which maintains a large terminal in Detroit. Norfolk Southern, meanwhile, will replace West Coast options for those in Cleveland with new departures from the Port of New York and New Jersey. A new thrice weekly train from Port Liberty Bayonne will launch Oct. 21, the railroad announced, supplementing its existing daily train from APM’s Elizabeth Marine Terminal. Shippers in Kansas City will also see adjustments on Oct. 21. The current daily train from Elizabeth Marine Terminal will be replaced by a three-day-per-week schedule but originate from Elizabeth, Port Liberty Bayonne, and Port Liberty New York on Staten Island, offering service from more terminals despite fewer weekly departures. Contact Ari Ashe at ari.ashe@spglobal.com .

Rail News

North-American rail

Intermodal providers

Norfolk Southern tweaks international services from West, East coasts

<div class="phx-topic abstract-wrapper">The carrier’s operational update did not provide profit and loss figures, but the declining revenue is an indication of tough times ahead as liners sail into their financial reporting season.</div>

The carrier’s operational update did not provide profit and loss figures, but the declining revenue is an indication of tough times ahead as liners sail into their financial reporting season.

<div class="phx-topic">Hong Kong-based ocean carrier OOCL on Thursday reported a significant drop in third-quarter revenue as fast-declining rates on the trans-Pacific and Asia-Europe trades dragged down its top-line earnings. The operational update did not provide profit and loss figures, but the declining revenue is an indication of tough times ahead as carriers sail into their financial reporting season. The Cosco Shipping Holdings subsidiary ended the third quarter with total revenue of $2.26 billion, down 25.9% year over year, as the average revenue per TEU dropped 26%. The two east-west routes out of Asia were mainly responsible for the declining revenue. Frontloading on both the trans-Pacific and Asia-Europe led to an early end to the peak season, which was evident in the drop in OOCL’s revenue on the two trade lanes as falling demand and excess capacity dragged down rates. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e8c13a3e-9f5a-412f-8741-adbf5e1a7779"></dynamic-object></div>Historically, the trans-Pacific is the largest earner among OOCL’s trade lanes, but third-quarter revenue on the route was down 33.2% at $837 million. On Asia-Europe, revenue fell 38.3% to $479 million, while intra-Asia/Australasia revenue was down 12.9% at $766 million. The trans-Atlantic, the smallest of OOCL’s main trades, was the only lane where third-quarter revenue growth was recorded, increasing 25.4% to $180 million. <h3>Flat volume across trade lanes </h3>Third-quarter volume across all four trade lanes was almost flat, increasing 0.7% year over year to 1.9 million TEUs, while the total available capacity rose 4.2%. From a trade lane perspective, the trans-Pacific recorded volume of 526,032 TEUs, a decline of 4.7%, while Asia-Europe volume was flat at 346,001 TEUs. Intra-Asia/Australasia volume was up 1.7% at 938,090 TEUs, with the trans-Atlantic recording a sharp 22.8% increase to 137,016 TEUs. Over the first nine months of the year, OOCL’s total revenue fell 8.3% year over year to $6.9 billion, dragged down by average revenue per TEU that fell 12.4%. Trans-Pacific revenue declined 14.6% to $2.5 billion, while Asia-Europe revenue was down 20.3% at $1.4 billion. Nine-month intra-Asia/Australasia revenue rose 4.2% to $2.2 billion, with trans-Atlantic revenue up 20.3% at $544 million. Volume handled by OOCL in the first nine months was up 4.7% at 5.8 million TEUs. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Hong Kong-based ocean carrier OOCL on Thursday reported a significant drop in third-quarter revenue as fast-declining rates on the trans-Pacific and Asia-Europe trades dragged down its top-line earnings. The operational update did not provide profit and loss figures, but the declining revenue is an indication of tough times ahead as carriers sail into their financial reporting season. The Cosco Shipping Holdings subsidiary ended the third quarter with total revenue of $2.26 billion, down 25.9% year over year, as the average revenue per TEU dropped 26%. The two east-west routes out of Asia were mainly responsible for the declining revenue. Frontloading on both the trans-Pacific and Asia-Europe led to an early end to the peak season, which was evident in the drop in OOCL’s revenue on the two trade lanes as falling demand and excess capacity dragged down rates. Historically, the trans-Pacific is the largest earner among OOCL’s trade lanes, but third-quarter revenue on the route was down 33.2% at $837 million. On Asia-Europe, revenue fell 38.3% to $479 million, while intra-Asia/Australasia revenue was down 12.9% at $766 million. The trans-Atlantic, the smallest of OOCL’s main trades, was the only lane where third-quarter revenue growth was recorded, increasing 25.4% to $180 million. Flat volume across trade lanes Third-quarter volume across all four trade lanes was almost flat, increasing 0.7% year over year to 1.9 million TEUs, while the total available capacity rose 4.2%. From a trade lane perspective, the trans-Pacific recorded volume of 526,032 TEUs, a decline of 4.7%, while Asia-Europe volume was flat at 346,001 TEUs. Intra-Asia/Australasia volume was up 1.7% at 938,090 TEUs, with the trans-Atlantic recording a sharp 22.8% increase to 137,016 TEUs. Over the first nine months of the year, OOCL’s total revenue fell 8.3% year over year to $6.9 billion, dragged down by average revenue per TEU that fell 12.4%. Trans-Pacific revenue declined 14.6% to $2.5 billion, while Asia-Europe revenue was down 20.3% at $1.4 billion. Nine-month intra-Asia/Australasia revenue rose 4.2% to $2.2 billion, with trans-Atlantic revenue up 20.3% at $544 million. Volume handled by OOCL in the first nine months was up 4.7% at 5.8 million TEUs. Contact Greg Knowler at greg.knowler@spglobal.com .

Container lines

Asia-Europe

Trans-Pacific

Container Shipping News

Tumbling rates on trans-Pacific, Asia-Europe drag down OOCL Q3 revenue

<div class="phx-topic abstract-wrapper">A lack of transparency in carbon pricing from carriers is frustrating breakbulk shippers, while the industry must strike a balance that supports environmental goals without undermining the sector’s ability to function.</div>

A lack of transparency in carbon pricing from carriers is frustrating breakbulk shippers, while the industry must strike a balance that supports environmental goals without undermining the sector’s ability to function.

<div class="phx-topic">Project cargo shippers are demanding greater visibility and clear, uniform pricing for carbon mitigation measures undertaken by carriers, arguing that carbon levies should be integrated directly into freight rates. “Carriers need to be way more forthcoming with charges, even if two years out,” a shipper told the Journal of Commerce. “Volume is volume.” Another shipper added that carbon costs should “be part of the freight rate, not a handshake fee at the end.” Current practices mean that while “some carriers disclose, some just give us an $80,000 bill after the fact,” the source said. Project cargo shippers also called for a global carbon pricing standard to level the competitive playing field. “We need a cost of carbon for everyone across the world,” said a third shipper. “It is a disadvantage to certain sectors if we are not going to play in the same space.” The source added that inconsistent regulation creates unfair burdens for compliant regions or companies. <h3>Need to balance environmental goals </h3>Shippers said that “flow down” environmental processes now reach deep into the project cargo supply chain. Increased environmental reporting demands from downstream come from freight forwarders, carriers and trucking companies who are often mandated to report carbon and offsets for carbon emissions. “We have a responsibility to have these discussions with our vendors,” said one shipper. “But it comes at a cost and there is a balance to play,” which highlights the trade-off between sustainability and financial viability. Another shipper said the industry must strike a balance that supports environmental goals without undermining the sector’s ability to function. “We need to think about whether we want a voice about regulations that are responsible but don’t destroy the business,” the sources said. From a carrier perspective, the technological hurdles to decarbonization remain immense. “One of the biggest challenges [to decarbonization] is scalability and availability of fuels,” Ben Collins, global project cargo manager at Mediterranean Shipping Co., told a Breakbulk Americas panel last week. “There is a lot of work still to be done on this.” Collins also posed the question of whether customers are willing to pay for decarbonization. “There is a long way to go before this nut can be cracked, but cracked it will be,” he said. Despite the challenges, the adoption of green initiatives appears to be gaining momentum in the sector. Vedran Muratbegovic, senior vice president/industrial at carrier Wallenius Wilhelmsen, noted the level of uptake was “increasing among customers.” For carriers such as Wallenius, achieving ambitious decarbonization targets means “partnerships have become increasingly important,” Muratbegovic said at Breakbulk Americas. Contact Carly Fields at <a href="mailto:carly.fields@spglobal.com">carly.fields@spglobal.com</a>.</div>

Project cargo shippers are demanding greater visibility and clear, uniform pricing for carbon mitigation measures undertaken by carriers, arguing that carbon levies should be integrated directly into freight rates. “Carriers need to be way more forthcoming with charges, even if two years out,” a shipper told the Journal of Commerce. “Volume is volume.” Another shipper added that carbon costs should “be part of the freight rate, not a handshake fee at the end.” Current practices mean that while “some carriers disclose, some just give us an $80,000 bill after the fact,” the source said. Project cargo shippers also called for a global carbon pricing standard to level the competitive playing field. “We need a cost of carbon for everyone across the world,” said a third shipper. “It is a disadvantage to certain sectors if we are not going to play in the same space.” The source added that inconsistent regulation creates unfair burdens for compliant regions or companies. Need to balance environmental goals Shippers said that “flow down” environmental processes now reach deep into the project cargo supply chain. Increased environmental reporting demands from downstream come from freight forwarders, carriers and trucking companies who are often mandated to report carbon and offsets for carbon emissions. “We have a responsibility to have these discussions with our vendors,” said one shipper. “But it comes at a cost and there is a balance to play,” which highlights the trade-off between sustainability and financial viability. Another shipper said the industry must strike a balance that supports environmental goals without undermining the sector’s ability to function. “We need to think about whether we want a voice about regulations that are responsible but don’t destroy the business,” the sources said. From a carrier perspective, the technological hurdles to decarbonization remain immense. “One of the biggest challenges [to decarbonization] is scalability and availability of fuels,” Ben Collins, global project cargo manager at Mediterranean Shipping Co., told a Breakbulk Americas panel last week. “There is a lot of work still to be done on this.” Collins also posed the question of whether customers are willing to pay for decarbonization. “There is a long way to go before this nut can be cracked, but cracked it will be,” he said. Despite the challenges, the adoption of green initiatives appears to be gaining momentum in the sector. Vedran Muratbegovic, senior vice president/industrial at carrier Wallenius Wilhelmsen, noted the level of uptake was “increasing among customers.” For carriers such as Wallenius, achieving ambitious decarbonization targets means “partnerships have become increasingly important,” Muratbegovic said at Breakbulk Americas. Contact Carly Fields at carly.fields@spglobal.com .

Heavy-haul transport

Project cargo

Project cargo shippers urge shakeup for inconsistent carbon costs

<div class="phx-topic abstract-wrapper">A range of vendors have emerged in recent years with a singular focus on improving coordination of truckload arrivals, keying on load prioritization and performance metrics.</div>

A range of vendors have emerged in recent years with a singular focus on improving coordination of truckload arrivals, keying on load prioritization and performance metrics.

<div class="phx-topic">Fragmentation in the truckload market is behind many of the challenges that have prevented shippers, brokers and carriers from coordinating more effectively on appointment scheduling. But technology that assists all three parties, especially software focused on system connectivity and appointment performance, is driving progress in this long-neglected corner of the industry. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6094563_0.1.jpg"></img></div>In particular, software is aiming to help receivers coordinate with carriers by pulling data from their respective backbone systems, whether it’s a purchase order management system or warehouse management system used by a shipper or a transportation management system used by a carrier. Because more than one in five truckloads is brokered, technology is also geared toward letting the broker manage appointment coordination. “Connectivity is really the solution to that problem, not necessarily saying one specific group has to own it,” Tom Curee, president of appointment scheduling software vendor Qued, said at the Journal of Commerce’s Inland Distribution Conference in Chicago last week. “Because then you’ve got two other groups that are pointing the fingers at one group, and I just don’t think that ever ends.” Taking responsibility for the challenges of appointment scheduling remains an issue, largely because of the inherent fragmentation of the industry. That manifests itself in a lack of clarity over who takes the lead in setting up the appointment, and who invests in technology to improve the process. “It is a challenge for everyone, but it impacts different parties to different degrees,” Jesse Buckingham, CEO of truckload automation vendor Vooma, said at the Inland conference. “If you’re running a warehouse, you’re really thinking about the optimization of your labor, and that might actually mean having a bunch of trucks stacked up outside. You want to be a good shipper, but being a good shipper might not actually matter quite as much to your bottom line.” A carrier, meanwhile, will focus on whether a driver is waiting at a facility. “That can really destroy the utilization of that driver’s time and that asset,” Buckingham said. “If you’re a broker, you know the difference between scheduling a really good appointment and a bad one can be $100 or $200 of margin.” <h3>Proper incentives </h3>For Buckingham, that is a matter of incentive structure, and his assertion is that the newer, technology-focused approaches to the appointment scheduling problem are best aimed at brokers, “who, frankly, care a little bit more.” But Tony Botos, vice president of operations at Capstone Logistics and a former shipper, said at the conference that shippers have a huge incentive to invest in scheduling technology. He said a former shipper where we he worked “saw over a million dollars in labor savings” by being able to reduce the number of customer service representatives responsible for coordinating carrier arrivals at receiving facilities.“And it’s not too capital intensive,” Botos said. “You can quickly establish this type of software in your environment and get the systems to talk to the TMS. The [return on investment] on this is less than six months in most cases.” One way he navigated those competing priorities was to focus on appointment performance. “That’s maybe adjusting that appointment from 60 minutes to 65 minutes to 67 minutes,” Botos said. Deema Adama, CEO of scheduling software company Bigger Picture, said a platform should be able to gauge not just how an appointment is scheduled but also the effectiveness of those appointments. “Are we making the right decisions when we’re setting those target times based off of performance that we’re learning from these interactions?” Adama said at the Inland conference. “And the warehouse can judge how they are allocating labor based off of the trends of capacity coming in and out of their warehouse.” <h3>Prioritization problem </h3>One other element that vendors are focused on is allowing shippers to prioritize appointment-setting based on the demands of individual shipments. For instance, if an appointment is available at 9 a.m., it’s likely that a shipper or broker will grab a time slot regardless of how important it is for that load to use that appointment. “There may be an inbound load of Styrofoam material that isn’t going to actually halt production for something that you’re doing,” Curee said. “Meanwhile, that buffalo seasoning actually has to be here at 9 a.m. because the buffalo seasoning is going to stop the line. And the receiver doesn’t have an appointment until 3 p.m. Well, we would have taken 9 a.m. if we would have had access to it, but appointment scheduling is nothing more than a glorified ‘first-come, first-served.’” Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>.</div>

Fragmentation in the truckload market is behind many of the challenges that have prevented shippers, brokers and carriers from coordinating more effectively on appointment scheduling. But technology that assists all three parties, especially software focused on system connectivity and appointment performance, is driving progress in this long-neglected corner of the industry. In particular, software is aiming to help receivers coordinate with carriers by pulling data from their respective backbone systems, whether it’s a purchase order management system or warehouse management system used by a shipper or a transportation management system used by a carrier. Because more than one in five truckloads is brokered, technology is also geared toward letting the broker manage appointment coordination. “Connectivity is really the solution to that problem, not necessarily saying one specific group has to own it,” Tom Curee, president of appointment scheduling software vendor Qued, said at the Journal of Commerce’s Inland Distribution Conference in Chicago last week. “Because then you’ve got two other groups that are pointing the fingers at one group, and I just don’t think that ever ends.” Taking responsibility for the challenges of appointment scheduling remains an issue, largely because of the inherent fragmentation of the industry. That manifests itself in a lack of clarity over who takes the lead in setting up the appointment, and who invests in technology to improve the process. “It is a challenge for everyone, but it impacts different parties to different degrees,” Jesse Buckingham, CEO of truckload automation vendor Vooma, said at the Inland conference. “If you’re running a warehouse, you’re really thinking about the optimization of your labor, and that might actually mean having a bunch of trucks stacked up outside. You want to be a good shipper, but being a good shipper might not actually matter quite as much to your bottom line.” A carrier, meanwhile, will focus on whether a driver is waiting at a facility. “That can really destroy the utilization of that driver’s time and that asset,” Buckingham said. “If you’re a broker, you know the difference between scheduling a really good appointment and a bad one can be $100 or $200 of margin.” Proper incentives For Buckingham, that is a matter of incentive structure, and his assertion is that the newer, technology-focused approaches to the appointment scheduling problem are best aimed at brokers, “who, frankly, care a little bit more.” But Tony Botos, vice president of operations at Capstone Logistics and a former shipper, said at the conference that shippers have a huge incentive to invest in scheduling technology. He said a former shipper where we he worked “saw over a million dollars in labor savings” by being able to reduce the number of customer service representatives responsible for coordinating carrier arrivals at receiving facilities. “And it’s not too capital intensive,” Botos said. “You can quickly establish this type of software in your environment and get the systems to talk to the TMS. The [return on investment] on this is less than six months in most cases.” One way he navigated those competing priorities was to focus on appointment performance. “That’s maybe adjusting that appointment from 60 minutes to 65 minutes to 67 minutes,” Botos said. Deema Adama, CEO of scheduling software company Bigger Picture, said a platform should be able to gauge not just how an appointment is scheduled but also the effectiveness of those appointments. “Are we making the right decisions when we’re setting those target times based off of performance that we’re learning from these interactions?” Adama said at the Inland conference. “And the warehouse can judge how they are allocating labor based off of the trends of capacity coming in and out of their warehouse.” Prioritization problem One other element that vendors are focused on is allowing shippers to prioritize appointment-setting based on the demands of individual shipments. For instance, if an appointment is available at 9 a.m., it’s likely that a shipper or broker will grab a time slot regardless of how important it is for that load to use that appointment. “There may be an inbound load of Styrofoam material that isn’t going to actually halt production for something that you’re doing,” Curee said. “Meanwhile, that buffalo seasoning actually has to be here at 9 a.m. because the buffalo seasoning is going to stop the line. And the receiver doesn’t have an appointment until 3 p.m. Well, we would have taken 9 a.m. if we would have had access to it, but appointment scheduling is nothing more than a glorified ‘first-come, first-served.’” 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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