<div class="phx-topic abstract-wrapper">US shippers are opening contract talks early, extending existing agreements, and seeking short-term contracts to hedge against expected 2021 rate increases.</div>

US shippers are opening contract talks early, extending existing agreements, and seeking short-term contracts to hedge against expected 2021 rate increases.

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<div>The cost of freight transportation in and out of the United States — whether it be for an ocean container, space on an airplane, an empty 53-foot trailer, or a parcel van making a final-mile delivery — is rising significantly. That’s forcing cargo owners to take a hard look at 2021 transportation budgets, in terms of not just how to mitigate cost increases but what they can do to maintain service.Further complicating 2021 transportation budgets is broad uncertainty about the health of the US economy and indeed US consumers themselves, as COVID‑19 cases hit new highs this fall. Although US...

The cost of freight transportation in and out of the United States — whether it be for an ocean container, space on an airplane, an empty 53-foot trailer, or a parcel van making a final-mile delivery — is rising significantly. That’s forcing cargo owners to take a hard look at 2021 transportation budgets, in terms of not just how to mitigate cost increases but what they can do to maintain service. Further complicating 2021 transportation budgets is broad uncertainty about the health of the US economy and indeed US consumers themselves, as COVID‑19 cases hit new highs this fall. Although US consumer demand for physical goods is white-hot, as reflected by the unexpected wave of Asian imports battering West Coast ports, economists are warning of a lengthy economic recovery. That leaves shippers’ budgetary plans balanced on a knife’s edge as they meet with carriers across all modes to discuss the renewal of annual contracts. The tight freight markets of the fourth quarter provide an argument for moderate to significant contractual rate increases, but the possibility of a slower US recovery makes cementing long-term plans increasingly difficult for shippers. Logistics managers are responding by opening contract talks early, extending existing contracts where possible, and seeking short-term contracts for smaller portions of their business, according to several shippers and logistics executives that spoke with JOC.com. They’re making volume forecasts more accurate and protecting the business of core carriers that are crucial to their supply chains. They’re communicating early and often with carriers and with their own CEOs and CFOs. “You can’t hide from market pressure if it is real,” a logistics manager at a Midwest-based food shipper said. At the same time, excessive price pressure may backfire, he said. “Money doesn’t come from thin air. In an environment where swaths of the economy are closed and many business categories and channels are dark, how long should carriers expect to ask for more?” This year is not 2018, the last period when transportation capacity was this tight, at least on land, spurring double-digit rate hikes. At that time, the US economy was expanding healthily. That’s certainly not the case in 2020, and it may not be next year either. “By the second half of 2021, we could be back to a carrier recession with lagging volumes,” the food shipper said. “I wouldn’t mistake market volatility for a carrier bull run on a humming economy.” Disruption, demand tighten capacity Freight capacity across modes is expected to remain tight heading into 2021, however. It’s not just that transportation demand in some sectors, such as big-box retail and e-commerce, is high. Eight months after the COVID-19 pandemic crashed the economy, supply chains of all types remain disrupted and assets and workers dislocated. “The challenges our [shipper] customers face vary by industry,” Mark Yeager, president of third-party logistics provider (3PL) Redwood Logistics, said in an interview. He pointed out that some industries lag others in this recovery. Manufacturing has not recovered to pre-COVID levels of demand and has had difficulty bringing employees back to factory floors. “Some [customers] are facing major shifts in their inbound flows and in production capacity; some are seeing a shift in who they’re shipping to,” Yeager said. “Layer on top of that the complexities of a market that is shifting as quickly as I’ve ever seen, and it’s not surprising that shippers have blown through their budgets. They’re not used to this.” The extent of proposed rate hikes is frustrating shippers, especially those that held themselves out as “shippers of choice” and didn’t press for rate cuts when the bottom dropped out of the market in the second quarter. Shippers are also raising complaints about carrier service, from blanked container ship sailings to late less-than-truckload (LTL) deliveries. “We’re taking a much harder look at the service side” in trucking negotiations, said a West Coast–based consumer goods shipper. “If I’m going to pay the higher rate, then I need something in return. If we’re paying more, and we still get crappy service, we’ve got to find a different vendor.” Shorter contracts, better forecasting The threat of higher rates on land, sea, and air has more and more shippers tossing their old annual contract playbooks and shortening their budgeting horizons. They’re negotiating more narrowly focused, shorter-term contracts that lock in transportation rates and capacity they need today, tomorrow, and next week, rather than six to nine months from now. But shorter-term bids require more data and flexibility from shippers, according to John Haber, CEO of Spend Management Experts. “Now more than ever, shippers need to understand all of their shipping costs and be able to adapt quickly to sudden changes,” Haber told JOC.com. “Investments in visibility and analytic tools are important to [be able to] access and understand shipping data.” Even short-term contracts won’t head off rate increases, however. Data reported by marketing intelligence firm Xeneta show short-term ocean container rates in late October were in the range of $2,400 to $2,500 per FEU to the West Coast. That compares with the trans-Pacific rates of $1,300 to $1,400 per FEU importers secured in annual service contracts this spring. Looking toward 2021, importers are bracing for a possible doubling of ocean freight rates in the trans-Pacific. Although negotiations on 2021-22 contracts won’t begin until next spring, carriers have alerted customers that rates could be in the range of $2,000 to $2,500 per FEU, with one carrier telling JOC.com “negotiations will start at the higher end of that range.” Several sources indicate shippers could be looking at 20 to 30 percent rate hikes from container lines and mid-single-digit increases from intermodal rail and trucking providers. FedEx has announced a general rate increase of 4.9 percent beginning in January, and UPS is expected to follow suit, but parcel carriers are also using surcharges more than in previous years to manage shipment intake. Better forecasting may help retailers and direct importers avoid the nightmare they have endured since summer, when carriers began charging spot rates that exceeded $3,800 per FEU to the West Coast and $4,600 to the East Coast for any imports above a shipper’s minimum quantity commitment (MQC). That nightmare followed them to shore, as Union Pacific Railroad imposed thousands of dollars in surcharges from West Coast ports on freight beyond service contract commitments as imports flooded its network. Surcharges rippled through to some LTL carriers and to parcel operators FedEx and UPS, as each tried to prevent their networks from drowning in freight. As a result, shippers say they will try to be more precise when it comes to forecasting in 2021, to ensure they remain within MQCs. The logistics manager of an automotive parts company whose imports are relatively consistent throughout the year said he will base his MQCs on “normal” demand and then guard against unexpected surges via non-vessel-operating common carriers (NVOs) or short-term contracts. The difficulty for many shippers is getting good forecasting data from their suppliers. “We’ve noticed a lot of our factories just are not savvy enough to give good forecasts,” a Southeast furniture shipper said. “The truckload carriers we use need this data; otherwise the factory is going to be jammed up with products because the trucker hasn’t shown up on time.” Simply jumping at the lowest contract rates in the market is a recipe for disaster, beneficial cargo owners (BCOs) told JOC.com. If carriers generally believe the service contract rates they have negotiated in the spring are compensatory, they should be more measured in imposing general rate increases during periods of high demand, shippers said. However, if ocean carriers are as successful in managing vessel capacity next year as they were this year, there is a “probability” that trans-Pacific contract rates increase by $1,000 per container “and that rates to the West Coast effectively double year on year,” said James Caradonna, general manager of pricing, Americas, at M+R Forwarding and MCL-Multi Container Line, an ocean freight forwarder. BCOs believe they can avoid extreme swings in ocean container pricing if service contracts recognize the uncertainties in the current trade environment and the terms are written to protect the ocean carriers as well as shippers if trade conditions change dramatically. The same holds true across transportation modes, shippers and consultants say. “We’re seeing shippers say, ‘I need different strategies to value my incumbents,’” said Ben Cubitt, senior vice president of supply chain and transportation at the 3PL Transplace. His shipper customers are approaching motor carriers early and agreeing not to put their business up for bid, or accepting a moderate rate increase to keep those core carriers, he said. When it comes to last-mile and package pricing, Haber said UPS and FedEx are trying to get shippers into long-term contracts to better plan their own capacity needs. He thinks parcel capacity constraints will ease as additional workers hired in 2020 stay on at the carriers into 2021. “But all of this, of course, is dependent on the availability of a [COVID-19] vaccine, which will impact last-mile delivery capacity availability — by how much is anyone’s guess right now,” he said. Air cargo’s capacity problem While ocean carriers managed — some might even say restricted — capacity this year, airlines simply lost it. A significant percentage of available global air freight capacity is carried in the bellies of passenger aircraft, the vast majority of which were grounded when international travel bans were imposed in late March. That slashed cargo space on the trans-Pacific, Asia–Europe, and Europe–North America routes in half overnight. Some destinations were even more severely affected, such as routes to South America, where as much as 70 percent of cargo travels in passenger planes. The removal of so much capacity sent rates soaring to record levels during the second quarter, and while those rates have come down from their mid-May highs, capacity has remained well below the level of demand, keeping rates at elevated levels on all trade lanes. Now, air cargo-heavy product launches, such as new smartphones, are filling the limited capacity and again pushing up rates. With no widescale resumption of passenger transport likely for two or three years, some cargo owners are turning to expedited ocean and rail services as an alternative, but the majority of air cargo shippers, for whom these are not viable options, can expect the air segment of their transportation spend next year to be substantially higher than in the past. Air capacity will become even tighter when a COVID-19 vaccine is ready for mass production and distribution. “That’s going to be a major disruptor, especially to the cold chain and air freight,” said John Janson, global logistics manager at apparel distributor SanMar. “There just isn’t enough capacity to fulfill the demand if you’re delivering vaccines to millions of people around the globe. That is going to put tremendous pressure on the marketplace.” Rate expectations gap Shippers are deploying some of the same cost control strategies in trucking and intermodal rail as they are on the ocean: using short-term contracts, strengthening core carrier relationships, improving volume forecasts, and hedging against demand shocks by working with 3PLs and additional carriers. “We’ve had to make adjustments week to week,” Matt Montour, senior director of logistics at IPC, the purchasing cooperative for franchisees in the Subway restaurant chain, said in an interview. “The challenge is how do you get through the next months?” Contract negotiations right now are not about price, but about securing needed capacity, he said. The Southeast furniture shipper also sees more frequent bids as part of the solution for rising intermodal costs. “You just can’t do an annual bid and sit back and leave it alone,” he said. “You probably have to be in the market three to five times a year. Sometimes the swings in intermodal pricing can be crazy.” “Volume is definitely elevated in pockets while sorely missing in others,” the Midwest food shipper said. He emphasized the need to protect core carriers and reward those who provide great service. “Flooding your network with low-cost carriers that just want to get a foot in the door tends to decimate the routing guide,” he said. “On the flip side, any carrier approaching the table looking for a double-digit increase due to the pandemic may lose their invitation.” There’s a gap in pricing expectations that has not yet begun to close. While many US shippers expect truck pricing to increase by mid-single digits, some carriers expect much more. The reason most often cited is lack of truck drivers. “We expect contract rates in 2021 to increase on average by 10 to 15 percent,” Eric Fuller, president and CEO of US Xpress Enterprises, told investment analysts during an Oct. 23 earnings call. Fuller believes a year-over-year decline in the number of long-haul truck drivers may reach 200,000 by 2021, keeping pressure on pricing. As a result, Fuller expects to see structural changes in the request for proposal (RFP) bidding process over the next three to five years. “I wouldn’t say that this year is the year” for significant change, he said during the call. “This year, everybody’s really focused around trying to capture capacity because of concerns that are going to be ongoing into 2021.” Taking it to the C-Suite Logistics managers, of course, can’t wait three to five years to discuss next year’s budget with their CFOs and CEOs. This year, those discussions have been tense, to say the least. “My warning to my C-suite this year sent them through a loop,” said a furniture shipper who asked not to be identified. “They called an immediate meeting the next morning with everybody on the phone to talk about ocean rates and asked me how this could have happened. They were in disbelief. But there’s no way out, there’s nowhere to hide.” “How do I go to the C-suite? I go to them with a bulletproof vest on,” another shipper said. “At the same time, everybody who’s doing the same thing we are is dealing with the same thing. We’re not being singled out as a customer by our suppliers. So, if we’re not able to increase pricing in the marketplace, we have to find other areas where we can cut back.” The COVID-19 pandemic has brought the importance of the supply chain and transportation to the attention of everyone from the C-suite down to the sub-basement. When they’re called to explain rocketing costs, logistics managers need to bring more data to the table, said Dave Reiss, senior vice president of customer relations for the 3PL Arrive Logistics. “There’s more data, more indices available today than ever before,” Reiss said. “If you’re going to talk to your finance team or your C-suite, you’ve got to leverage these indices. You can’t just say, ‘Hey, we’re going to get a 5 or 6 percent rate increase year over year.’ You have to have the justification behind it and explain what’s going on in the marketplace.” Executive Editor Mark Szakonyi, Senior Editors Ari Ashe, Greg Knowler, and Bill Mongelluzzo, and Senior Contributor Cathy Morrow Roberson contributed to this story. Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @willbcassidy .

Air Cargo

Trucking News

Rail News

Maritime

Shippers look to keep 2021 transportation budgets grounded

<div class="phx-topic abstract-wrapper">The journey time, about two to three days better than typical industry metrics, comes despite congestion in other parts of partner CPKC’s network.</div>

The journey time, about two to three days better than typical industry metrics, comes despite congestion in other parts of partner CPKC’s network.

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<div class="phx-topic">Schneider National said Friday its flagship Mexico Midwest Express (MMX) intermodal service with partner Canadian Pacific Kansas City (CPKC) is continuing to deliver strong results in 2025, offering faster transit times and higher on-time reliability than many cross-border alternatives despite congestion in other parts of CPKC’s network. The MMX service, launched two years ago, connects inland Mexican cities such as Monterrey and San Luis Potosí with Chicago via a single-line rail route. The service bypasses traditional interchange delays at the border, with two spans over the Laredo bridge and switching yards on each side of the border to handle crew changes. While Schneider did not disclose current shipment totals due to its quiet period ahead of the release of its second-quarter earnings, the company said MMX performance metrics through the first half of 2025 were strong, with average transit times of four days and a cargo theft rate of less than 0.02%. Schneider also said the on-time performance of MMX remains above 95%. The typical transit time from Monterrey to Chicago is about six or seven days. “Decreasing shipping time by even a few days matters to our customers because the faster products can get on the shelves, the faster those items can land in the hands of consumers,” Michael Baumgardt, Schneider’s senior vice president of intermodal, said in a statement. The Intermodal Association of North America (IANA) reported that railroads hauled a combined 86,000-plus domestic containers this year through May 31, a 21% increase compared with the same period a year earlier. Railroads hauled nearly 60,000 domestic containers to the Midwest during the same period, up 9% from a year earlier. Schneider is currently the only intermodal provider offering a true single-line cross-border solution from Mexico to the Midwest, eliminating any chance of delays caused by an interchange between two railroads. Schneider said service on the MMX has not deteriorated much since CPKC’s <a href="https://www.joc.com/article/cpkc-acknowledges-service-woes-to-us-regulators-vows-remediation-6030412">messy IT transition</a> in May that affected service in Texas, Louisiana, and Mississippi. The exception is that some shippers have experienced lengthy delays moving cargo from Laredo to Chicago because the container dwell inside the Laredo yard is up 122% since early May compared with a year ago. Schneider rivals <a href="https://www.joc.com/article/jb-hunt-launching-quantum-de-mexico-for-time-sensitive-cross-border-freight-6014579">J.B. Hunt Transport Services</a> and <a href="https://www.joc.com/article/hub-group-boosts-cross-border-business-in-jv-with-mexican-dray-carrier-5745355">Hub Group</a> have also ramped up investments in cross-border intermodal in recent months, introducing new services and partnerships aimed at capturing a growing share of freight moving between the US and Mexico. Union Pacific Railroad completed a pilot program this spring to speed up the handoff between Mexican and US crews by doing it inside UP’s Eagle Pass terminal rather than on the middle of the International Railway Bridge. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Schneider National said Friday its flagship Mexico Midwest Express (MMX) intermodal service with partner Canadian Pacific Kansas City (CPKC) is continuing to deliver strong results in 2025, offering faster transit times and higher on-time reliability than many cross-border alternatives despite congestion in other parts of CPKC’s network. The MMX service, launched two years ago, connects inland Mexican cities such as Monterrey and San Luis Potosí with Chicago via a single-line rail route. The service bypasses traditional interchange delays at the border, with two spans over the Laredo bridge and switching yards on each side of the border to handle crew changes. While Schneider did not disclose current shipment totals due to its quiet period ahead of the release of its second-quarter earnings, the company said MMX performance metrics through the first half of 2025 were strong, with average transit times of four days and a cargo theft rate of less than 0.02%. Schneider also said the on-time performance of MMX remains above 95%. The typical transit time from Monterrey to Chicago is about six or seven days. “Decreasing shipping time by even a few days matters to our customers because the faster products can get on the shelves, the faster those items can land in the hands of consumers,” Michael Baumgardt, Schneider’s senior vice president of intermodal, said in a statement. The Intermodal Association of North America (IANA) reported that railroads hauled a combined 86,000-plus domestic containers this year through May 31, a 21% increase compared with the same period a year earlier. Railroads hauled nearly 60,000 domestic containers to the Midwest during the same period, up 9% from a year earlier. Schneider is currently the only intermodal provider offering a true single-line cross-border solution from Mexico to the Midwest, eliminating any chance of delays caused by an interchange between two railroads. Schneider said service on the MMX has not deteriorated much since CPKC’s messy IT transition in May that affected service in Texas, Louisiana, and Mississippi. The exception is that some shippers have experienced lengthy delays moving cargo from Laredo to Chicago because the container dwell inside the Laredo yard is up 122% since early May compared with a year ago. Schneider rivals J.B. Hunt Transport Services and Hub Group have also ramped up investments in cross-border intermodal in recent months, introducing new services and partnerships aimed at capturing a growing share of freight moving between the US and Mexico. Union Pacific Railroad completed a pilot program this spring to speed up the handoff between Mexican and US crews by doing it inside UP’s Eagle Pass terminal rather than on the middle of the International Railway Bridge. Contact Ari Ashe at ari.ashe@spglobal.com .

North-American rail

Intermodal providers

Schneider says MMX service delivering four-day Mexico-Chicago transit time

<div class="phx-topic abstract-wrapper">The project, due to begin Monday, will also improve truck access by upgrading the gate infrastructure and boost efficiency through the replacement of an outdated terminal operating system.</div>

The project, due to begin Monday, will also improve truck access by upgrading the gate infrastructure and boost efficiency through the replacement of an outdated terminal operating system.

<div class="phx-topic">The International Transportation Service (ITS) terminal in Long Beach will begin a $365 million upgrade on Monday that will increase its container capacity by about 50% and enable it to work two 18,000-TEU ships simultaneously. The work involves filling in a 19-acre slip at the terminal to make the property usable. Scheduled for completion in about three and a half years, the project will also improve truck access by upgrading the gate infrastructure and boost efficiency through the replacement of an outdated terminal operating system (TOS) with a new TOS, ITS CEO Kim Holtermand told the Journal of Commerce. “Our tech is quite old. It’s time to upgrade it,” Holtermand said. ITS is, in effect, two separate terminals separated by the slip, which hinders operational efficiency, Holtermand said. Filling in the slip will increase the terminal’s size to 277 acres and create a more efficient square-shaped facility. With a total of 3,500 linear feet of berth, ITS will be able to handle two super-post-Panamax container ships, or one 18,000-TEU vessel and two smaller ships simultaneously, he said. “It will be a large efficient facility with big [super post-Panamax] cranes and improved infrastructure,” Holtermand said. ITS’ annual throughput capacity will increase by about 50% to 1.5 million container moves, or 2.6 million TEUs, he said. <h3>Gate improvements expected to boost efficiency </h3>Included in the project will be a reconfiguration of the terminal’s gate complex and a new TOS that will streamline truck access and egress. Trucks calling at ITS in June had an average turn time of 71 minutes; the average turn time for the Long Beach-Los Angeles port complex in June was 62 minutes, according to the Harbor Trucking Association. ITS will also continue its efforts to electrify all its cargo-handling equipment by 2030 to meet the deadline set in the joint Los Angeles-Long Beach <a href="https://www.joc.com/article/la-lb-port-significantly-cuts-emissions-but-tougher-challenges-await-5742585">Clean Air Action Plan</a>, Holtermand said. The equipment will continue to be operated by dockworkers, he added. Noel Hacegaba, COO at the Port of Long Beach, said the ITS expansion project is the latest example of how the port and its stakeholders are not only growing, but growing green. Another project that will accomplish the port’s environmental goals is the <a href="https://www.joc.com/article/southern-california-ports-ready-to-defend-green-initiatives-from-trump-white-house-5927353">Pier B on-dock railyard</a> that will eliminate hundreds of truck trips each day by loading inland point intermodal (IPI) containers directly onto trains rather than trucking them to near-dock railyards, Hacegaba said. Construction of the Pier B facility continues to advance, he said, with completion expected in 2032. On-dock moves account for about 27% of Long Beach’s IPI volume; completion of the Pier B facility will raise that to about 35%, Hacegaba said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.</div>

The International Transportation Service (ITS) terminal in Long Beach will begin a $365 million upgrade on Monday that will increase its container capacity by about 50% and enable it to work two 18,000-TEU ships simultaneously. The work involves filling in a 19-acre slip at the terminal to make the property usable. Scheduled for completion in about three and a half years, the project will also improve truck access by upgrading the gate infrastructure and boost efficiency through the replacement of an outdated terminal operating system (TOS) with a new TOS, ITS CEO Kim Holtermand told the Journal of Commerce. “Our tech is quite old. It’s time to upgrade it,” Holtermand said. ITS is, in effect, two separate terminals separated by the slip, which hinders operational efficiency, Holtermand said. Filling in the slip will increase the terminal’s size to 277 acres and create a more efficient square-shaped facility. With a total of 3,500 linear feet of berth, ITS will be able to handle two super-post-Panamax container ships, or one 18,000-TEU vessel and two smaller ships simultaneously, he said. “It will be a large efficient facility with big [super post-Panamax] cranes and improved infrastructure,” Holtermand said. ITS’ annual throughput capacity will increase by about 50% to 1.5 million container moves, or 2.6 million TEUs, he said. Gate improvements expected to boost efficiency Included in the project will be a reconfiguration of the terminal’s gate complex and a new TOS that will streamline truck access and egress. Trucks calling at ITS in June had an average turn time of 71 minutes; the average turn time for the Long Beach-Los Angeles port complex in June was 62 minutes, according to the Harbor Trucking Association. ITS will also continue its efforts to electrify all its cargo-handling equipment by 2030 to meet the deadline set in the joint Los Angeles-Long Beach Clean Air Action Plan , Holtermand said. The equipment will continue to be operated by dockworkers, he added. Noel Hacegaba, COO at the Port of Long Beach, said the ITS expansion project is the latest example of how the port and its stakeholders are not only growing, but growing green. Another project that will accomplish the port’s environmental goals is the Pier B on-dock railyard that will eliminate hundreds of truck trips each day by loading inland point intermodal (IPI) containers directly onto trains rather than trucking them to near-dock railyards, Hacegaba said. Construction of the Pier B facility continues to advance, he said, with completion expected in 2032. On-dock moves account for about 27% of Long Beach’s IPI volume; completion of the Pier B facility will raise that to about 35%, Hacegaba said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Container Shipping News

Port News

North American ports

Marine terminals

Long Beach ITS terminal upgrade to boost capacity by about 50%

<div class="phx-topic abstract-wrapper">The decline came despite a 4.4% increase in total container volumes to 2 million TEUs, the carrier said in a quarterly update Friday.</div>

The decline came despite a 4.4% increase in total container volumes to 2 million TEUs, the carrier said in a quarterly update Friday.

<div class="phx-topic">OOCL’s second-quarter revenues dropped 6.5% year over year to $2.1 billion amid falling freight rates on trans-Pacific and Asia-Europe services, the carrier said in a quarterly update Friday. The revenue decline came despite a 4.4% increase in total container volumes to 2 million TEUs, the carrier said. OOCL, the liner offshoot of Hong Kong-listed Orient Overseas (International), a Cosco Shipping Holdings subsidiary, said second-quarter trans-Pacific revenues were also hit by a 4.3% fall in container volumes to 501,814 TEUs. Trans-Pacific revenues fell 18% to $753 million in the second quarter from $922 million a year earlier. OOCL said revenue from Asia-Europe services dropped 15% to $443 million in the April–June period despite a 3% increase in liftings to 361,722 TEUs. There were brighter results in OOCL’s two other main markets. Intra-Asia and Australasia remained OOCL’s biggest contributor to revenue and volumes after the carrier saw a 9% increase to $728 million in second-quarter revenue. Liftings climbed 8% to 951,940 TEUs. Revenue from trans-Atlantic services surged 25% to $194 million, while container volumes rose 21% to 147,824 TEUs. OOCL’s update only gave revenue and liftings figures; parent company OOIL will likely release full half-year results in mid-August. The carrier’s revenue result echoes that of Taiwan’s Big Three container lines, <a href="https://www.joc.com/article/taiwans-big-three-carriers-see-falling-q2-revenues-as-demand-slump-begins-6041608">which on Wednesday reported worsening second-quarter revenues</a> compared with the first quarter. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

OOCL’s second-quarter revenues dropped 6.5% year over year to $2.1 billion amid falling freight rates on trans-Pacific and Asia-Europe services, the carrier said in a quarterly update Friday. The revenue decline came despite a 4.4% increase in total container volumes to 2 million TEUs, the carrier said. OOCL, the liner offshoot of Hong Kong-listed Orient Overseas (International), a Cosco Shipping Holdings subsidiary, said second-quarter trans-Pacific revenues were also hit by a 4.3% fall in container volumes to 501,814 TEUs. Trans-Pacific revenues fell 18% to $753 million in the second quarter from $922 million a year earlier. OOCL said revenue from Asia-Europe services dropped 15% to $443 million in the April–June period despite a 3% increase in liftings to 361,722 TEUs. There were brighter results in OOCL’s two other main markets. Intra-Asia and Australasia remained OOCL’s biggest contributor to revenue and volumes after the carrier saw a 9% increase to $728 million in second-quarter revenue. Liftings climbed 8% to 951,940 TEUs. Revenue from trans-Atlantic services surged 25% to $194 million, while container volumes rose 21% to 147,824 TEUs. OOCL’s update only gave revenue and liftings figures; parent company OOIL will likely release full half-year results in mid-August. The carrier’s revenue result echoes that of Taiwan’s Big Three container lines, which on Wednesday reported worsening second-quarter revenues compared with the first quarter. Contact Keith Wallis at keithwallis@hotmail.com .

Container lines

Trans-Atlantic

Asia-Europe

Trans-Pacific

OOCL’s Q2 revenue slides on lower trans-Pacific, Asia-Europe rates

<div class="phx-topic abstract-wrapper">Adoption of digital bills of lading has been stronger in Asia, but US traction is necessary to help container lines meet a 2030 commitment to fully move to electronic documents.</div>

Adoption of digital bills of lading has been stronger in Asia, but US traction is necessary to help container lines meet a 2030 commitment to fully move to electronic documents.

<div class="phx-topic">US Bank has completed its first trade finance transaction using a digital ocean bill of lading (BoL), another small step toward the industry’s intent to transition to 100% digital BoLs by 2030. The transaction, disclosed by US Bank on Thursday, was facilitated by electronic bill of lading (eBL) software vendor WaveBL for a US-based exporter using Mediterranean Shipping Co., which issued the eBL. MSC is a WaveBL customer, one of two container lines using the software vendor; Zim Integrated Shipping Services is the other. Adoption of eBLs is growing, but off a low base, and is more commonly used in Asia, where the eBL software provider IQAX is getting traction among banks and export suppliers. The nine member carriers of the Digital Container Shipping Association (DCSA) committed in early 2023 to shift to 100% digital bills of lading by 2030. This week’s move by US Bank highlights the potential in American banks adopting a process to accommodate digital BoLs. Traditionally, bills of lading transfer titles between buyers and sellers at a point determined by the shipment’s Incoterm, and banks traditionally play a role in issuing letters of credit to suppliers. In theory, an eBL would negate the need for most letters of credit, as the digital data contained in the document can be used by the buyer, seller, shipping line and banks to understand the financial risk of the shipment. “Our clients are looking for smarter, more efficient ways to manage their import and export activities,” US Bank Senior Vice President Christine Bravo said in a statement. US Bank said a transaction such as this normally would require a courier to physically transport documents across continents, often taking several days. “By contrast, the digital process reduced that timeline to minutes, eliminating delays, [and] enhancing security and compliance,” the bank said. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

US Bank has completed its first trade finance transaction using a digital ocean bill of lading (BoL), another small step toward the industry’s intent to transition to 100% digital BoLs by 2030. The transaction, disclosed by US Bank on Thursday, was facilitated by electronic bill of lading (eBL) software vendor WaveBL for a US-based exporter using Mediterranean Shipping Co., which issued the eBL. MSC is a WaveBL customer, one of two container lines using the software vendor; Zim Integrated Shipping Services is the other. Adoption of eBLs is growing, but off a low base, and is more commonly used in Asia, where the eBL software provider IQAX is getting traction among banks and export suppliers. The nine member carriers of the Digital Container Shipping Association (DCSA) committed in early 2023 to shift to 100% digital bills of lading by 2030. This week’s move by US Bank highlights the potential in American banks adopting a process to accommodate digital BoLs. Traditionally, bills of lading transfer titles between buyers and sellers at a point determined by the shipment’s Incoterm, and banks traditionally play a role in issuing letters of credit to suppliers. In theory, an eBL would negate the need for most letters of credit, as the digital data contained in the document can be used by the buyer, seller, shipping line and banks to understand the financial risk of the shipment. “Our clients are looking for smarter, more efficient ways to manage their import and export activities,” US Bank Senior Vice President Christine Bravo said in a statement. US Bank said a transaction such as this normally would require a courier to physically transport documents across continents, often taking several days. “By contrast, the digital process reduced that timeline to minutes, eliminating delays, [and] enhancing security and compliance,” the bank said. Contact Eric Johnson at eric.johnson@spglobal.com .

Logistics Technology News

US Bank eBL trial for US exporter notches another step toward 2030 goal

<div class="phx-topic abstract-wrapper">The Marseille-based liner has finalized operational plans to call off its remaining vessel-sharing agreements with the carriers after Gemini Cooperation-linked realignments.</div>

The Marseille-based liner has finalized operational plans to call off its remaining vessel-sharing agreements with the carriers after Gemini Cooperation-linked realignments.

<div class="phx-topic">CMA CGM is switching from vessel-sharing agreements (VSAs) to standalone operations across trades out of India in a new strategic approach as it expands its fleet. The Marseille-based liner has finalized operational plans to call off its two remaining VSAs with Hapag-Lloyd and Maersk after Gemini Cooperation-linked realignments. The upcoming disengagements include the Swahili Express (SWAX2) loop run with Hapag-Lloyd on the India-East Africa trade and the Midas network, involving two strings, operated with Maersk on the India-West Africa trade. CMA CGM has had three ships out of the five used on the joint SWAX2, with one vessel each from Hapag-Lloyd and Emirates Shipping Line (ESL). Midas has involved a fleet of 10 ships — six from Maersk and four from CMA CGM — on String 1 and three vessels from each on String 2. The French carrier has already sent its partners termination notices, due to take effect from next month for the SWAX2 operation and from late 2025/early 2026 for the Midas network. Sources at Hapag-Lloyd and Maersk in India were unavailable for comment. The Gemini launch in February saw CMA CGM delink from the decades-long consortium partnerships with Hapag-Lloyd on the India-US East Coast and North Europe trades. CMA CGM’s India VSA operations are now confined to Cosco Shipping/OOCL on the Epic service. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

CMA CGM is switching from vessel-sharing agreements (VSAs) to standalone operations across trades out of India in a new strategic approach as it expands its fleet. The Marseille-based liner has finalized operational plans to call off its two remaining VSAs with Hapag-Lloyd and Maersk after Gemini Cooperation-linked realignments. The upcoming disengagements include the Swahili Express (SWAX2) loop run with Hapag-Lloyd on the India-East Africa trade and the Midas network, involving two strings, operated with Maersk on the India-West Africa trade. CMA CGM has had three ships out of the five used on the joint SWAX2, with one vessel each from Hapag-Lloyd and Emirates Shipping Line (ESL). Midas has involved a fleet of 10 ships — six from Maersk and four from CMA CGM — on String 1 and three vessels from each on String 2. The French carrier has already sent its partners termination notices, due to take effect from next month for the SWAX2 operation and from late 2025/early 2026 for the Midas network. Sources at Hapag-Lloyd and Maersk in India were unavailable for comment. The Gemini launch in February saw CMA CGM delink from the decades-long consortium partnerships with Hapag-Lloyd on the India-US East Coast and North Europe trades. CMA CGM’s India VSA operations are now confined to Cosco Shipping/OOCL on the Epic service. Contact Bency Mathew at bencyvmathew@gmail.com .

CMA CGM ends existing Indian VSAs with Hapag-Lloyd, Maersk

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The world of LTL is slow to embrace change. Business anachronisms permeate current supply chain processes. These vestiges of the way things used to work define the LTL freight transportation procurement process of many modern shippers.David Knuth, logistics specialist at IEWC, a global supplier of cable and wire based in Wisconsin, is happy to have modernized the RFP process, automating the entire LTL bidding procedure with Bid$ense, SMC³’s automated truckload and LTL freight transportation sourcing solution. But when prompted, he can still recall what once was.In his previous job, a large part of his duties were consumed by creating an intermodal bid package for carriers. In a spreadsheet, Knuth detailed the company’s volumes lane by lane, taking care to delete any errant keystrokes or misleading data. He would then email out the information to each carrier, taking time to respond to detailed technical questions about the spreadsheet data. Finally, he had to compile all the results, create an algorithm that would compare the carriers on each lane, and award the business.“It was a huge undertaking. It took about four months to do,” Knuth said of the old process. “It was almost a full-time job for that part of the year, every year.”In his new job at IEWC, he sat down with Bid$ense on day one and was amazed at the capabilities. Knuth had never before used a bid tool. SMC³’s latest versions of Bid$ense automate the process even further, taking truckload and LTL RFPs entirely online. The tool draws on RFP best-practices protocols to streamline the bidding communication process, enabling bidding carriers to respond accurately and promptly to shipper requests. The solution also does all the distribution work automatically, electronically submitting shipper bid data to carriers based on their actual service capabilities and performance records. Carriers are alerted with timely prompts for RFP deliverables, so shippers aren’t waiting by the phone for responses.Another benefit of automating the process is the data-cleansing assistance. When Knuth sent spreadsheets to carriers, data errors might cloud the bidding process; he might have to resend data or simply accept a price that did not truly reflect the costs of doing business. Data cleansing is incredibly beneficial, he said.The spreadsheet technique also made bidding analysis an onerous task. Since Bid$ense automates and streamlines the entire RFP process, intensive examination is now simple. SMC³ knows that each bid has more than one best outcome. With uniform responses from each carrier, shippers can quickly rank results and create an unlimited quantity of what-if scenarios to make the optimal procurement decision.Jesse Burnett of Central Garden &amp; Pet experiences many of the same benefits. Founded in 1980, Central Garden &amp; Pet has spent the last three decades growing from a small garden supply company to a provider of a range of products from dog chews and bird seed to soil supplements and natural insecticides. For much of its life, the company shipped these disparate goods via LTL and truckload carriers to retailers throughout the country, relying on each business unit to negotiate directly with their freight transportation providers. This arrangement worked fairly well for a small company, but as Central Garden &amp; Pet expanded, leadership decided to consolidate decision making.Burnett helped centralize the transportation decision making in 2015 with SMC³’s Bid$ense. Before Bid$ense, every business unit operated independently as far as negotiating with carriers.“There were a lot of different things just floating around,” he said. “We didn’t have master agreements in place; no national pricing at all. The pricing from carriers was just all over the place, depending on where you were.”The transformations he saw with Bid$ense were immediate. Burnett has been using the tool about every other year since its implementation at the company. Central Garden and Pet’s $19.6 million 2019 LTL bid saved the company just more than 9 percent when compared to its historical average. For Burnett, though, bid automation extends far beyond savings.“We knew that we weren’t getting the best pricing offer from our carriers just because nothing was centralized,” he continued. “We knew that if we combined everything from all these business units and paired it with one corporate offering, then it would drive some cost benefit with it.”When the company initially decided to centralize bid procurement, executives researched a number of different methodologies and technologies. In the end, though, Burnett found that Bid$ense was both widespread and well known, and that his carrier partners already knew how to use the application. Burnett also highlighted the data-cleansing process as a major benefit, saying the rigorous process ensures that carriers always return the best price.“It definitely has helped drive savings,” he said. “Any time you go out there and you drive that competitiveness with the carriers and they know they’re in a bid environment, it seems to sharpen their pencils.”Transportation procurement is an integral part of the modern supply chain. With Bid$ense, shippers can develop a strategic implementation plan that saves them time and money, but also helps them create strong relationships with their carrier partners. These carriers appreciate the solution’s data-cleansing process; when carriers receive a complete shipment history and future volume forecast, they don’t have to guess on pricing. Carriers that receive more data from shippers get a complete picture of that shipper’s freight, allowing them to accurately plan instead of simply preparing for the worst-case scenario. Clean data presented through an automated system can lead to both bigger shipment savings and a lasting partnership between carrier and customer.Whether customers are looking to streamline over-the-road transportation bidding by automating the RFP process or create an entirely new, centralized sourcing process, Bid$ense has the analytical horsepower to get the job done.SMC³ 2020 Customer Case Study

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Shippers save money, time with automated transportation bidding tools

If there’s one immutable truth in the world of logistics, it’s this: LTL is an inherently complex form of transportation. Tariffs, rates, DIM weights, transit times — it’s enough to confuse even seasoned logistics professionals. The solution to this knowledge gap has historically been on-the-job training or university supply chain education, but for a variety of reasons there is now a pressing need for third-party, remote LTL training that prepares logistics workers for transportation success. Global Scope Can Overlook Local Intricacies In the past, professionals looking to move into a supply chain career learned about the basics of supply chain from universities. However, many of these college supply chain programs are now global in scope, focusing on worldwide supply chain management instead of the intricacies of specialized domestic transportation. And even these programs, which used to be widespread, are becoming less common. LTL is not an industry of broad-brush strokes; supply chain professionals really need a pointillistic understanding of the logistics of LTL in order to excel in the industry. Accelerating Need for Dedicated LTL Education This lack of specified training put the onus on employers to prepare new hires with the LTL knowledge needed to do their jobs. Dedicated LTL study is a necessity, not a luxury. At the same time, changes in LTL and the broader supply chain world are accelerating. The reliance on e-commerce has ballooned since the start of the pandemic, and last-mile LTL shipments and related e-commerce strains on the supply chain won’t diminish once social distancing abates. That genie isn’t going back into the bottle. So supply chain employers need logistics workers that are fully versed in all aspects of the industry, ready to solve unique shipping and delivery problems based on their extensive supply chain knowledge But why care about LTL? It’s been reported that some shippers in today’s world are no longer concerned with what mode is used to ship their goods. A Multimodal Approach Ensures On-Time Delivery This mode agnosticism means supply chain stakeholders have to be well versed in all modes of transportation. As unforeseen weather events and other disruptions, such as protests, become more common, savvy logistics employees will need to be armed with familiarity of all modes, not just the most popular, to ensure that freight is delivered on time, without damage, and in the most financially expedient way possible. Offerings like SMC³’s LTL online education courses cover a wide range of topics from LTL basics and operations to more advanced concepts like pricing analytics and transportation law. The company also has plans to continually refresh content, adding new expert presenters and taking the feedback of students to make the courses even better as time goes on. Learn more about&nbsp;<a href="https://logisticstrainingcenter.com/smc3-courses/" rel="noreferrer" class="joc_admin__link">SMC³’s LTL Online Education program</a>&nbsp;and view the 2021 hybrid schedule, featuring live industry experts,&nbsp;<a href="https://www.smc3.com/onlinelearning2021/" rel="noreferrer" class="joc_admin__link">here.</a>

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Filling the Supply Chain Education Gap with LTL Education Courses

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