<div class="phx-topic abstract-wrapper">Inventory management has a dark secret: Forecasting isn&amp;rsquo;t only worthless; it also exacerbates the very problem it was designed to solve. 
 
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Inventory management has a dark secret: Forecasting isn&rsquo;t only worthless; it also exacerbates the very problem it was designed to solve.

<div>Inventory management has a dark secret: Forecasting isn&amp;rsquo;t only worthless; it also exacerbates the very problem it was designed to solve. If forecasting worked, retail inventory levels would have decreased and availability levels would have increased over the past decade. But despite unprecedented spending by retailers and third-party logistics providers on forecasting technology, retail supply chains consistently carry too much inventory, and product availability remains below what the market demands.That&amp;rsquo;s the view at Agentrics, a Chicago-based 3PL that sees collaborative planning as the key to managing lean inventories. In April, the company launched a hosted software-as-a-service platform to help retailers...

Inventory management has a dark secret: Forecasting isn&rsquo;t only worthless; it also exacerbates the very problem it was designed to solve. If forecasting worked, retail inventory levels would have decreased and availability levels would have increased over the past decade. But despite unprecedented spending by retailers and third-party logistics providers on forecasting technology, retail supply chains consistently carry too much inventory, and product availability remains below what the market demands. That&rsquo;s the view at Agentrics, a Chicago-based 3PL that sees collaborative planning as the key to managing lean inventories. In April, the company launched a hosted software-as-a-service platform to help retailers and their suppliers create more collaborative, synchronized supply chains. Related: 3PLs Linked In &ldquo;We want to support our customers and market to achieve a fully integrated business network, delivering efficient processes in a spirit of more collaboration and openness,&rdquo; CEO Wellington Machado said. Agentrics was formed in 2005 as a service member organization to provide a hosted collaborative exchange platform for major retailers including ASDA, Carrefour, Marks & Spencer, Pepsico, Coles, Walgreens and Best Buy. The company entered the U.S. market in 2005 and expanded its scope from a member service organization to a commercial entity. The timing is fortuitous. With the 2008-09 recession wreaking havoc on inventory planning, it&rsquo;s more important than ever for retailers to improve their logistics and inventory management. And with memories fresh from 2009&rsquo;s inventory slashing and the rapid restocking that started last year, many retailers again are pulling back on inventories to wait out weak consumer sentiment in a stuttering recovery. Last year&rsquo;s restocking was a big reason inventory costs are rising despite lower interest rates. The annual State of Logistics Report, released last month by the Council of Supply Chain Management Professionals, put those costs up 10.3 percent in 2010. Companies also face higher insurance, depreciation, tax and obsolescence costs, according to the report. Although companies are keeping inventories tight, they&rsquo;re still higher than in 2009, said Rosalyn Wilson, senior business analyst at Delcan Corp. and author of the benchmark report. They&rsquo;re also out of balance; although retail sales are about 8 percent higher than they were at this time last year, inventories are up only 5 percent, according to Walter Kemmsies, an economist at transportation engineering firm Moffatt & Nichol. The imbalance could be explained in part by retailer pessimism in the face of a U.S. economy that sputtered to an anemic growth rate of 1.8 percent in the first quarter. Rising food and gas prices, high unemployment and a battered housing market are weakening consumer confidence. &ldquo;The consensus forecasts started 2011 full of optimism and have been steadily declining,&rdquo; Journal of Commerce Economist Mario Moreno said. Technology is only part of the inventory management equation. While it gives 3PLs their competitive advantage, it can&rsquo;t solve management problems, said Steve Robinson, senior vice president of retail for Transplace, a Dallas-based logistics and technology provider. Robinson likens 3PL technology to a high-end racing bicycle. One person may mount it and fall off while another gets on and wins the Tour de France. &ldquo;Breakthrough performance is driven not by technology but by having the right business processes in place,&rdquo; he said. For Transplace, the process side is about combining lean principles for eliminating non-value-added steps with a Six Sigma focus on rigorous process discipline and a quantitative engineered approach to reducing variation. Retailers hope consumers will return, but they can&rsquo;t exactly plan on it, so they will continue to be conservative and selective in restocking inventories. &ldquo;Not much risk will be taken this year,&rdquo; Robinson said. With buffer and safety stocks drawn down and little margin for error, retailers&rsquo; logistics performance must improve dramatically. Transplace serves as a 3PL and lead logistics provider for a number of major retailers, providing an integrated, Web-based platform for transportation planning, order management, appointment scheduling and real-time visibility into inventory both at rest and in motion. It&rsquo;s been said that inventory is the lack of visibility into changes in supply or demand, and the inability to do anything about it. It&rsquo;s a point well taken, Robinson said, because all the visibility in the world won&rsquo;t help retailers unless their 3PL partners provide the business intelligence and analytics capabilities to execute corrective actions. Collaboration is the key to gaining the visibility into consumer and supplier behavior needed for effective inventory management. For retailers, the goal is to meet specified service levels, which could be in-stock levels at stores or distribution centers or percent on-time of requested date. Demand planning and forecasting are necessary for inventory management but hardly sufficient. Forecasts by definition are always wrong; even among collaborative organizations, accuracy rates are often in the 70 to 75 percent range, which means high rates of error. &ldquo;That&rsquo;s as good as it gets,&rdquo; Robinson said. &ldquo;You need tomorrow&rsquo;s newspaper or a crystal ball to get better.&rdquo; To compensate for forecasting errors, 3PLs must be able to respond to disruptions quickly with decisive action and flexibility. Retailers are experimenting with a number of practices to better manage lean inventories. Flexible fulfillment allows them to use store buffers to fulfill orders made through other channels and gives consumers the option of receiving goods by home delivery or store pickup. As retailers gain confidence in Internet sales and embrace their new identities as multichannel sellers, flexible fulfillment represents one of several new frontiers in terms of consumer choice. &ldquo;It is another tool for retailers to be more efficient relative to their initial investment in inventory,&rdquo; Robinson said. Increased in-transit visibility enables retailers to use dynamic allocation, an inventory planning process that takes into account inventory in the warehouse and in transit. Its use is predicated on the predictability of inbound shipments. By planning to ship inventory that has yet to arrive, retailers can hold less inventory, and can divert or reroute inventory in transit based on demand swings. Collaborative, synchronized supply chains offer the best hope for improving inventory performance and improved availability, easier detection of missing goods, streamlined store deliveries and increased sales from efficient replenishment of stock, said Bob Rossman, Agentrics&rsquo; vice president of supply chain. The key elements of collaborative inventory planning include sharing key operational information, building cooperative business processes that complement the processes of each organization, and building common goals, to ensure both partners are working to optimize the results. Today&rsquo;s retailers gather massive amounts of data related to demand, distribution, operations, new products and various sales channels. Sometimes collaboration fails because too much attention is paid to data rather than processes, resulting in a loss of focus on the end customer. To be actionable, data must be shared among supply chain partners and analyzed for optimal inventory levels. Retailers in general are trying to tie their inventory management decisions much more closely to the demand side, with a huge push to get closer to the customer. &ldquo;We are very focused on the demand side,&rdquo; Rossman said. &ldquo;Through execution, we make sure the product is in the right place based on demand.&rdquo; Agentrics sees inventory forecasting and demand-driven supply chains as mutually exclusive and proposes a five-point plan for retailers to transition to a &ldquo;perfect pull&rdquo; supply chain: optimizing display stock levels; determining replenishment frequency; minimum batch sizes; where to hold non-retail inventory; and establishing an IT system that generates operational signals for each link in the supply chain. Agentrics&rsquo; hosted SaaS model offers the advantages of the hosted transportation management systems that are growing in popularity in the U.S., including fee-based cost structures that lower purchasing, implementation and service costs associated with installed software, as well as scale and flexibility. SaaS models also place fewer demands on IT departments that give top priority to store systems and mission-critical applications. Post-recession, retailers are engaging in more collaborative programs such as vendor-managed inventory or collaborative planning forecasting and replenishment. In traditional replenishment models, suppliers wait for the retailer to place orders. Because the suppliers have no advance visibility into when orders are coming or what they will be, there is increased risk they won&rsquo;t be filled. In the most successful vendor-managed inventory models, suppliers are apprised of what is happening on the inventory side at store and warehouse levels, and they generate orders themselves. The model has long been in place among pharmacies and grocery chains, where manufacturers of consumer goods make replenishment decisions based on retailer warehouse inventory. Merchandisers in the snack foods and beverage segments of the retail industry will drive out to stores and make replenishment decisions on the spot at the store level. VMI is making headway into traditional retail-supplier relationships as some retailers launch pilot programs. The programs usually start with top-tier suppliers in which the two parties align strategies and goals. Data more limited in scope, such as forecasts, is shared with lower-tier suppliers in emerging VMI relationships. Contact David Biederman at inexdb@comcast.net .

International ports

In Stock, Out of Sync

<div class="phx-topic abstract-wrapper">Terminal operators and port authorities must transition from their historic, passive roles as infrastructure caretakers into active orchestrators of integrated logistics ecosystems, writes Robbert van Trooijen.</div>

Terminal operators and port authorities must transition from their historic, passive roles as infrastructure caretakers into active orchestrators of integrated logistics ecosystems, writes Robbert van Trooijen.

Feature image

<div class="phx-topic">In my <a href="https://www.joc.com/article/landside-infrastructure-is-container-shippings-next-great-chokepoint-6209457">most recent piece for the Journal of Commerce</a>, I argued that the real battle for supply chains has shifted inland. Building larger vessels or rushing mega-alliances into service will not solve systemic disruptions if vessels can’t find a berth. So naturally, many players in the ports and terminals sector place great emphasis on engineering inside the gate. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6220550_0.1.jpg"></img></div>Whether investing in a greenfield project or expanding a brownfield footprint, port authorities and gateway terminal operators tend to focus most of their attention on the infrastructure and hardware within the gate, like the draft alongside, the length of the quayside, the deployment of super post-Panamax gantry cranes, the projected yard density, and straddle carrier fleets. After all, these are the things that matter to the primary customers, the ocean carriers. However, even with electrification and automation, hardware tends to be less of a differentiator these days. Most modern terminals have deep draft, 25 to 30 gross moves per hour, efficient quayside operations, and some degree of automation. So where does it go wrong? We all know the infamous "white elephants": state-of-the-art terminals built to world-class specifications that ultimately failed to achieve a decent return on investment. Although it may come across as an oversimplification, I would argue that one of the reasons for waning loyalty or suboptimal results, particularly for competing gateway terminals serving the same catchment area, is that the operators treated the long-term loyalty of the shipper or consignee as an afterthought. Back in 2007, I witnessed Thomas W. Malnight, then a leading professor of strategy and general management at IMD business school, teach a master class where he challenged the maritime community with a radical strategic shift. Malnight advocated that port ecosystems must look past their immediate ocean carrier clients and focus more on "the customer’s customer” — the shipper or consignee. He taught us that the ultimate metric of a gateway terminal's value is how effectively it can convince the cargo owner to remain anchored to that specific ecosystem over a decade. The rationale is surprisingly simple: Once a large enough number of beneficial cargo owners (BCOs) are loyal to a port ecosystem, so will the ocean carriers, and the tables have turned. To achieve this, terminal operators and port authorities must transition from their historic, passive roles as infrastructure caretakers into active orchestrators of integrated logistics ecosystems. This pivot requires moving beyond the traditional port gate to discover what end-users genuinely require to secure long-term cargo commitments. <h3>Shippers’ needs transcend infrastructure </h3>When we ask BCOs what they need, the answers transcend fundamental maritime infrastructure. Shippers do not build supply chain resilience around the number of container cranes on a dock. They demand reliable, seamless multimodal connections, including hinterland rail access and barge routes. They seek competitive trade environments like specialized free zone setups equipped with bonded warehouses, cross-docking hubs, cold chain infrastructure, (potentially) air-sea setups for high-value goods, and access to an affordable and strategically located hinterland optimized for potential assembly plants. Constructing this caliber of landside ecosystem is difficult to achieve for a port authority acting in isolation. But with a clear master plan that includes collaboration among provincial, state, and municipal public bodies; private investors, and diverse logistics service providers, the foundation is there for long-term success. Robbert van Trooijen, founder of Inception Partners and a McKinsey Senior Advisor, had a 33-year tenure with The Nedlloyd Group, P&amp;O Nedlloyd and the Maersk Group. Contact him at <a href="mailto:robbert@inceptionpartners.org">robbert@inceptionpartners.org</a>. </div>

In my most recent piece for the Journal of Commerce, I argued that the real battle for supply chains has shifted inland. Building larger vessels or rushing mega-alliances into service will not solve systemic disruptions if vessels can’t find a berth. So naturally, many players in the ports and terminals sector place great emphasis on engineering inside the gate. Whether investing in a greenfield project or expanding a brownfield footprint, port authorities and gateway terminal operators tend to focus most of their attention on the infrastructure and hardware within the gate, like the draft alongside, the length of the quayside, the deployment of super post-Panamax gantry cranes, the projected yard density, and straddle carrier fleets. After all, these are the things that matter to the primary customers, the ocean carriers. However, even with electrification and automation, hardware tends to be less of a differentiator these days. Most modern terminals have deep draft, 25 to 30 gross moves per hour, efficient quayside operations, and some degree of automation. So where does it go wrong? We all know the infamous "white elephants": state-of-the-art terminals built to world-class specifications that ultimately failed to achieve a decent return on investment. Although it may come across as an oversimplification, I would argue that one of the reasons for waning loyalty or suboptimal results, particularly for competing gateway terminals serving the same catchment area, is that the operators treated the long-term loyalty of the shipper or consignee as an afterthought. Back in 2007, I witnessed Thomas W. Malnight, then a leading professor of strategy and general management at IMD business school, teach a master class where he challenged the maritime community with a radical strategic shift. Malnight advocated that port ecosystems must look past their immediate ocean carrier clients and focus more on "the customer’s customer” — the shipper or consignee. He taught us that the ultimate metric of a gateway terminal's value is how effectively it can convince the cargo owner to remain anchored to that specific ecosystem over a decade. The rationale is surprisingly simple: Once a large enough number of beneficial cargo owners (BCOs) are loyal to a port ecosystem, so will the ocean carriers, and the tables have turned. To achieve this, terminal operators and port authorities must transition from their historic, passive roles as infrastructure caretakers into active orchestrators of integrated logistics ecosystems. This pivot requires moving beyond the traditional port gate to discover what end-users genuinely require to secure long-term cargo commitments. Shippers’ needs transcend infrastructure When we ask BCOs what they need, the answers transcend fundamental maritime infrastructure. Shippers do not build supply chain resilience around the number of container cranes on a dock. They demand reliable, seamless multimodal connections, including hinterland rail access and barge routes. They seek competitive trade environments like specialized free zone setups equipped with bonded warehouses, cross-docking hubs, cold chain infrastructure, (potentially) air-sea setups for high-value goods, and access to an affordable and strategically located hinterland optimized for potential assembly plants. Constructing this caliber of landside ecosystem is difficult to achieve for a port authority acting in isolation. But with a clear master plan that includes collaboration among provincial, state, and municipal public bodies; private investors, and diverse logistics service providers, the foundation is there for long-term success. Robbert van Trooijen, founder of Inception Partners and a McKinsey Senior Advisor, had a 33-year tenure with The Nedlloyd Group, P&O Nedlloyd and the Maersk Group. Contact him at robbert@inceptionpartners.org .

Supply chain

Port infrastructure

Marine terminals

Maritime

Beyond the terminal gate: Why the future lies in logistical ecosystems

<div class="phx-topic abstract-wrapper">Carrier sources have reported an average berthing delay of two days for regular services and up to five days for ad-hoc vessel calls at both ports, with the problems driven by inadequate drayage capacity.</div>

Carrier sources have reported an average berthing delay of two days for regular services and up to five days for ad-hoc vessel calls at both ports, with the problems driven by inadequate drayage capacity.

<div class="phx-topic">Supply chain stakeholders at India's Nhava Sheva and Mundra ports have been struggling to deploy adequate drayage capacity to keep export/import cargo flowing in recent weeks, leaving ocean carriers grappling with multiple operational challenges. Sources say inter-terminal container transfers linked to transshipment activity have also been affected. The inland cutbacks are primarily due to an unusual shortage of truck drivers after a large number of domestic migrant workers returned to their hometowns for a variety of reasons. Labor availability typically drops every year during the April-June summer holiday period, but a crunch of this scale was unexpected, port sources say. Carrier sources have reported an average berthing delay of two days for regular/window services and up to five days for ad-hoc vessel calls at Nhava Sheva and Mundra. Mega-liners with dedicated terminal operations are able to manage vessel turnarounds better, however. Late vessel arrivals from previous ports of call are adding to the delays, a bigger concern for Mundra given the pattern of Indian service rotations. To relieve the heightened berth pressure, the busier terminals at Adani Ports’ Mundra are now turning away ad-hoc callers, sources said. “There has been an acute shortage of drivers, coupled with disruptions at the port, due to which we anticipate that first- and last-mile movement of containers may get impacted,” inland service provider Adani Logistics told customers in an advisory. “We strongly recommend engaging with your respective shipping lines regarding any financial implications that may arise...which may be due to reasons beyond our control...” On-dock yards in Nhava Sheva and Mundra are overflowing with containers, triggering abrupt gate closings by terminals for cargo intake into the wharf, a major concern for carriers trying to push westbound cargo lifts. “The window to gate in exports is short and constantly changing,” said an executive at a leading European carrier who didn’t want to be identified. “That also means shippers have to run around quickly to organize a container trailer, often unable to find one in the present situation.” <h3>Container ‘no-shows’ also a problem </h3>Sunil Vaswani, executive director of India’s Container Shipping Lines Association, acknowledged that deployed trucking capacity remains a challenge. “The evacuation of import containers out of the terminals at Nhava Sheva still remains slow, which in turn impacts vessel productivity and berthing windows,” Vaswani said. “At Mundra, the import inventory situation is not as critical as at Nhava Sheva because about half of the boxes [there] move by rail.” Carriers are also said to be seeing a higher number of container “no-shows” because of the drayage disruption. Booked containers failing to turn up for loading generally run a penalty risk for shippers. Additionally, the slowdown in inter-terminal activity is weighing on the pace of evacuating Middle East-linked transshipment volumes currently held at Indian docks. As container dwells climb and service reliability deteriorates, freight depot owners and customs brokers are seeking safeguards for potential liability consequences. “Given the exceptional and unforeseen nature of the current situation, it may be treated as force majeure,” a trade notice from the Container Freight Stations Association of India said. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

Supply chain stakeholders at India's Nhava Sheva and Mundra ports have been struggling to deploy adequate drayage capacity to keep export/import cargo flowing in recent weeks, leaving ocean carriers grappling with multiple operational challenges. Sources say inter-terminal container transfers linked to transshipment activity have also been affected. The inland cutbacks are primarily due to an unusual shortage of truck drivers after a large number of domestic migrant workers returned to their hometowns for a variety of reasons. Labor availability typically drops every year during the April-June summer holiday period, but a crunch of this scale was unexpected, port sources say. Carrier sources have reported an average berthing delay of two days for regular/window services and up to five days for ad-hoc vessel calls at Nhava Sheva and Mundra. Mega-liners with dedicated terminal operations are able to manage vessel turnarounds better, however. Late vessel arrivals from previous ports of call are adding to the delays, a bigger concern for Mundra given the pattern of Indian service rotations. To relieve the heightened berth pressure, the busier terminals at Adani Ports’ Mundra are now turning away ad-hoc callers, sources said. “There has been an acute shortage of drivers, coupled with disruptions at the port, due to which we anticipate that first- and last-mile movement of containers may get impacted,” inland service provider Adani Logistics told customers in an advisory. “We strongly recommend engaging with your respective shipping lines regarding any financial implications that may arise...which may be due to reasons beyond our control...” On-dock yards in Nhava Sheva and Mundra are overflowing with containers, triggering abrupt gate closings by terminals for cargo intake into the wharf, a major concern for carriers trying to push westbound cargo lifts. “The window to gate in exports is short and constantly changing,” said an executive at a leading European carrier who didn’t want to be identified. “That also means shippers have to run around quickly to organize a container trailer, often unable to find one in the present situation.” Container ‘no-shows’ also a problem Sunil Vaswani, executive director of India’s Container Shipping Lines Association, acknowledged that deployed trucking capacity remains a challenge. “The evacuation of import containers out of the terminals at Nhava Sheva still remains slow, which in turn impacts vessel productivity and berthing windows,” Vaswani said. “At Mundra, the import inventory situation is not as critical as at Nhava Sheva because about half of the boxes [there] move by rail.” Carriers are also said to be seeing a higher number of container “no-shows” because of the drayage disruption. Booked containers failing to turn up for loading generally run a penalty risk for shippers. Additionally, the slowdown in inter-terminal activity is weighing on the pace of evacuating Middle East-linked transshipment volumes currently held at Indian docks. As container dwells climb and service reliability deteriorates, freight depot owners and customs brokers are seeking safeguards for potential liability consequences. “Given the exceptional and unforeseen nature of the current situation, it may be treated as force majeure,” a trade notice from the Container Freight Stations Association of India said. Contact Bency Mathew at bencyvmathew@gmail.com .

Port News

Trucking News

Surface

Drayage

Trucking labor

Rising container dwells hobble vessel flows at India's Nhava Sheva, Mundra ports

<div class="phx-topic abstract-wrapper">Highlighting the impact of lower freight rates in its first-quarter financials, Taiwan’s largest ocean carrier recorded a 22% year-over-year drop in average revenue per TEU, to $968/TEU. </div>

Highlighting the impact of lower freight rates in its first-quarter financials, Taiwan’s largest ocean carrier recorded a 22% year-over-year drop in average revenue per TEU, to $968/TEU.

<div class="phx-topic">Taiwan’s largest container line reported a 71% drop in first-quarter net profit Thursday, citing sharply lower freight rates in the period. Evergreen Marine, in a filing to the Taiwan stock exchange, said its Q1 net fell to $263 million from $897 million a year earlier. Revenue was down 25% to $2.7 billion. Highlighting the impact of lower freight rates in its first-quarter financials, Evergreen saw a 22% year-over-year drop in average revenue per TEU, to $968/TEU. Evergreen noted the biggest rate drop was on Asia-US East Coast trades, with index levels falling 66% to $1,533 per FEU in the first quarter, according to Shanghai Shipping Exchange data. Rate levels on Asia-Mediterranean trades fell 47% to $1,489/TEU. The carrier’s container volumes in the quarter were unchanged at 2.6 million TEUs. Evergreen, in a separate stock exchange filing Thursday, said its directors had agreed to spend $61.5 million to buy 18,000 shipping containers from the carrier’s container-making subsidiary, Evergreen Heavy Industrial Corporation (Malaysia). Evergreen is the seventh-largest ocean carrier globally, with 1.95 million TEUs of capacity in service, according to data from Sea-web, a sister product of the Journal of Commerce within S&amp;P Global. The other two carriers in Taiwan’s Big Three, Yang Ming and Wan Hai, <a href="https://www.joc.com/article/yang-ming-to-develop-cargo-base-to-offset-trade-geopolitical-uncertainties-6219998">reported their first-quarter financials earlier this week</a>, with both posting declines in net profit and revenues. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Taiwan’s largest container line reported a 71% drop in first-quarter net profit Thursday, citing sharply lower freight rates in the period. Evergreen Marine, in a filing to the Taiwan stock exchange, said its Q1 net fell to $263 million from $897 million a year earlier. Revenue was down 25% to $2.7 billion. Highlighting the impact of lower freight rates in its first-quarter financials, Evergreen saw a 22% year-over-year drop in average revenue per TEU, to $968/TEU. Evergreen noted the biggest rate drop was on Asia-US East Coast trades, with index levels falling 66% to $1,533 per FEU in the first quarter, according to Shanghai Shipping Exchange data. Rate levels on Asia-Mediterranean trades fell 47% to $1,489/TEU. The carrier’s container volumes in the quarter were unchanged at 2.6 million TEUs. Evergreen, in a separate stock exchange filing Thursday, said its directors had agreed to spend $61.5 million to buy 18,000 shipping containers from the carrier’s container-making subsidiary, Evergreen Heavy Industrial Corporation (Malaysia). Evergreen is the seventh-largest ocean carrier globally, with 1.95 million TEUs of capacity in service, according to data from Sea-web, a sister product of the Journal of Commerce within S&P Global. The other two carriers in Taiwan’s Big Three, Yang Ming and Wan Hai, reported their first-quarter financials earlier this week , with both posting declines in net profit and revenues. Contact Keith Wallis at keithwallis@hotmail.com .

Container lines

Container Shipping News

Softer freight rates push Evergreen to 71% decline in Q1 net profit

<div class="phx-topic abstract-wrapper">Capacity that has been exiting the truckload market since the start of the year isn’t likely to return, logistics experts say, making trucking more expensive for US shippers in the long-term.</div>

Capacity that has been exiting the truckload market since the start of the year isn’t likely to return, logistics experts say, making trucking more expensive for US shippers in the long-term.

<div class="phx-topic">Changes to US truckload capacity in early 2026 appear structural, not cyclical, analysts and logistics providers say, and will pose long-term challenges for shippers. “Tighter market conditions have been primarily driven by structural supply-side changes largely due to enforcement actions related to non-domiciled CDLs (commercial driver’s licenses) and English language proficiency,” Jared Weisfeld, chief strategy officer for logistics provider RXO, told the Journal of Commerce. In a cyclical market governed by economic conditions, capacity will wax and wane with demand, as truckload carriers add or sell off trucks. But demand this spring appears to be flat, Weisfeld and other sources said, and the current contraction in supply is an atypical reaction to an unprecedented level of regulatory enforcement. “This is a structural, not a cyclical, market inflection,” said Dean Croke, principal analyst at DAT Freight &amp; Analytics. That’s partly because reduced supply is largely attributed to regulatory enforcement driven by the federal government, not economics. Although the introduction of the electronic logging device (ELD) mandate in 2018 <a href="https://www.joc.com/article/elds-seen-reshaping-us-truck-shipping-patterns-5245603">eliminated capacity</a>, triggering a market inflection, the regulatory shock brought on by the licensing crackdown far exceeds the ELD impact, Croke said in an interview. “This exodus of capacity because of all the enforcement is not only structural, it’s permanent,” he said. “I don’t think these drivers are coming back.” Several convergent factors will make it more difficult to recruit truck drivers, Croke and other sources said. In addition to the licensing crackdown, efforts to strengthen drug testing could shrink the potential driver pool. “If we see hair follicle testing being mandated, that would have a much bigger impact (than the licensing crackdown),” he said. The spike in spot market rates and loads last month was “counter-seasonal,” said Mazan Danaf, principal economist at logistics provider Uber Freight. “April is supposed to be the softest month of the year in most regions,” Danaf told the Journal of Commerce. “Given that we’re seeing tightness (in capacity), we should expect more tightness to come,” he said. For many US shippers, the tightening of the truckload market has been unexpectedly sudden. Shippers have told the Journal of Commerce that new contracts negotiated in the 2025 fourth quarter and put in place in the first quarter are already being scrapped. “If you take all this to its logical conclusion, it puts a new floor under contract rates,” said Croke. “It’s going to cost more to run a truck in the future.” <h3>Contract rates rising faster </h3>DAT dry-van spot rates have consistently been 25% to 30% higher year over year since December – well before the war-driven surge in diesel fuel prices in March, Croke said. DAT’s average replacement truckload contract rate in mid-May was up 8% from a year ago, a sign that new rates entering contract routing guides are beginning to rise more quickly. Most truckload carriers and shippers contacted by the Journal of Commerce in recent weeks have said their contract truckload rates are rising 4% to 6% year over year. “We’re starting to see contract rates increase,” said Uber Freight’s Danaf. “Last year at this time they were up 1% to 2%, and now they’re sitting at 5% to 6% higher year over year. As long as spot market pressure persists, we expect to see contract and intermodal rates increasing.” The Journal of Commerce average US shipper-paid spot rate was up 34% year over year in April, rising 14 cents from March to $2.87 per mile. That compares with a 25% year-over-year gain in March and a 14.3% jump in February. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="db9b8835-0807-4b30-ac98-ed0f5544592a"></dynamic-object></div>“To see so much inflation on linehaul rates with demand doing what it is doing is not intuitive,” said RXO’s Weisfeld. “It speaks to how much capacity has entered the market over the last 10 years or so that is now coming out.” Just how much capacity has “come out” of the market is difficult to measure. The US Department of Transportation (DOT) this month claimed 20,000 truck drivers have been “kicked out of service” for failing to meet basic requirements in the past 12 months. “(Transportation Secretary) Duffy has said about 200,000 drivers with non-domiciled CDLs will lose their licenses,” Weisfeld said. “If the total number of CDLs is about 3.5 million, that puts the starting point (for capacity reduction) at 5% to 6%.” Narrowing the focus to for-hire drivers increases the impact. “As a percentage of the for-hire market, it could be closer to 10% to 15%, which is not insignificant,” Weisfeld said. It’s hard to put a good number on the amount of truckload capacity lost to the market, Croke said. “There’s clearly been enough (exits) to turn this into a supply-led repricing cycle,” he said. “Supply is doing what demand won’t, or can’t, at the moment.” <h3>More enforcement, everywhere </h3>Croke believes a significant number of drivers have simply parked their trucks to avoid being caught up in enforcement efforts, a trend he expects will be magnified by this week’s <a href="https://www.joc.com/article/annual-roadcheck-likely-to-tighten-us-trucking-capacity-boost-rates-6217163">International Roadcheck</a> across North America. A DAT survey of small motor carriers found 18% of respondents would idle their rigs during the three-day Roadcheck, in which police and state and provincial officials inspect thousands of trucks across the US, Canada and Mexico. But enforcement efforts go well beyond the annual Roadcheck. The Federal Motor Carrier Safety Administration (FMCSA) is partnering with state transportation departments and law enforcement agencies across the US throughout the year to crack down on truckers. In Florida, officials from several state and federal agencies joined forces to stop and inspect more than 3,300 trucks in a four-day truck inspection blitz in March. As a result, 176 truck drivers were placed out of service, 35 individuals were arrested on criminal charges, and 42 drivers were taken into custody for violating US immigration laws.  “Drivers are seeing things they haven’t seen before, and they’re posting about it on social media,” Croke said. “They’re seeing federal, state and local officials setting up blockades together.” That’s creating “hot zones” for spot rates in some US regions, he said. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

Changes to US truckload capacity in early 2026 appear structural, not cyclical, analysts and logistics providers say, and will pose long-term challenges for shippers. “Tighter market conditions have been primarily driven by structural supply-side changes largely due to enforcement actions related to non-domiciled CDLs (commercial driver’s licenses) and English language proficiency,” Jared Weisfeld, chief strategy officer for logistics provider RXO, told the Journal of Commerce. In a cyclical market governed by economic conditions, capacity will wax and wane with demand, as truckload carriers add or sell off trucks. But demand this spring appears to be flat, Weisfeld and other sources said, and the current contraction in supply is an atypical reaction to an unprecedented level of regulatory enforcement. “This is a structural, not a cyclical, market inflection,” said Dean Croke, principal analyst at DAT Freight & Analytics. That’s partly because reduced supply is largely attributed to regulatory enforcement driven by the federal government, not economics. Although the introduction of the electronic logging device (ELD) mandate in 2018 eliminated capacity , triggering a market inflection, the regulatory shock brought on by the licensing crackdown far exceeds the ELD impact, Croke said in an interview. “This exodus of capacity because of all the enforcement is not only structural, it’s permanent,” he said. “I don’t think these drivers are coming back.” Several convergent factors will make it more difficult to recruit truck drivers, Croke and other sources said. In addition to the licensing crackdown, efforts to strengthen drug testing could shrink the potential driver pool. “If we see hair follicle testing being mandated, that would have a much bigger impact (than the licensing crackdown),” he said. The spike in spot market rates and loads last month was “counter-seasonal,” said Mazan Danaf, principal economist at logistics provider Uber Freight. “April is supposed to be the softest month of the year in most regions,” Danaf told the Journal of Commerce. “Given that we’re seeing tightness (in capacity), we should expect more tightness to come,” he said. For many US shippers, the tightening of the truckload market has been unexpectedly sudden. Shippers have told the Journal of Commerce that new contracts negotiated in the 2025 fourth quarter and put in place in the first quarter are already being scrapped. “If you take all this to its logical conclusion, it puts a new floor under contract rates,” said Croke. “It’s going to cost more to run a truck in the future.” Contract rates rising faster DAT dry-van spot rates have consistently been 25% to 30% higher year over year since December – well before the war-driven surge in diesel fuel prices in March, Croke said. DAT’s average replacement truckload contract rate in mid-May was up 8% from a year ago, a sign that new rates entering contract routing guides are beginning to rise more quickly. Most truckload carriers and shippers contacted by the Journal of Commerce in recent weeks have said their contract truckload rates are rising 4% to 6% year over year. “We’re starting to see contract rates increase,” said Uber Freight’s Danaf. “Last year at this time they were up 1% to 2%, and now they’re sitting at 5% to 6% higher year over year. As long as spot market pressure persists, we expect to see contract and intermodal rates increasing.” The Journal of Commerce average US shipper-paid spot rate was up 34% year over year in April, rising 14 cents from March to $2.87 per mile. That compares with a 25% year-over-year gain in March and a 14.3% jump in February. “To see so much inflation on linehaul rates with demand doing what it is doing is not intuitive,” said RXO’s Weisfeld. “It speaks to how much capacity has entered the market over the last 10 years or so that is now coming out.” Just how much capacity has “come out” of the market is difficult to measure. The US Department of Transportation (DOT) this month claimed 20,000 truck drivers have been “kicked out of service” for failing to meet basic requirements in the past 12 months. “(Transportation Secretary) Duffy has said about 200,000 drivers with non-domiciled CDLs will lose their licenses,” Weisfeld said. “If the total number of CDLs is about 3.5 million, that puts the starting point (for capacity reduction) at 5% to 6%.” Narrowing the focus to for-hire drivers increases the impact. “As a percentage of the for-hire market, it could be closer to 10% to 15%, which is not insignificant,” Weisfeld said. It’s hard to put a good number on the amount of truckload capacity lost to the market, Croke said. “There’s clearly been enough (exits) to turn this into a supply-led repricing cycle,” he said. “Supply is doing what demand won’t, or can’t, at the moment.” More enforcement, everywhere Croke believes a significant number of drivers have simply parked their trucks to avoid being caught up in enforcement efforts, a trend he expects will be magnified by this week’s International Roadcheck across North America. A DAT survey of small motor carriers found 18% of respondents would idle their rigs during the three-day Roadcheck, in which police and state and provincial officials inspect thousands of trucks across the US, Canada and Mexico. But enforcement efforts go well beyond the annual Roadcheck. The Federal Motor Carrier Safety Administration (FMCSA) is partnering with state transportation departments and law enforcement agencies across the US throughout the year to crack down on truckers. In Florida, officials from several state and federal agencies joined forces to stop and inspect more than 3,300 trucks in a four-day truck inspection blitz in March. As a result, 176 truck drivers were placed out of service, 35 individuals were arrested on criminal charges, and 42 drivers were taken into custody for violating US immigration laws.  “Drivers are seeing things they haven’t seen before, and they’re posting about it on social media,” Croke said. “They’re seeing federal, state and local officials setting up blockades together.” That’s creating “hot zones” for spot rates in some US regions, he said. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Truckload

Supply-side changes to US truck market called ‘structural,’ not temporary

<div class="phx-topic abstract-wrapper">The Bank of Canada says the country’s maritime trade connectivity has dropped severely in the last decade just as the country looks to shift its international trade away from the US. </div>

The Bank of Canada says the country’s maritime trade connectivity has dropped severely in the last decade just as the country looks to shift its international trade away from the US.

<div class="phx-topic">Canada’s ports are less connected globally than a decade ago, exposing the country’s shippers to more supply chain risk, its central bank says. The warning comes as the country pivots its trade relations away from the US amid plans to invest billions in its ports. The Bank of Canada (BOC), in a research report published last week, showed that the country’s five largest ports have seen major declines in their connections to other global ports since 2016. The researchers used satellite data of container ship and car carrier transits to measure the number of unique destinations. That connectivity measure dropped 74% between 2016 and 2023, indicating “Canadian ports became relatively less central in global shipping networks compared with what they once were,” the BOC’s researchers said. “Global maritime shipping networks have been reshaped in ways that have reduced Canada’s relative connectivity and carrying capacity,” the bank said. “This less-central role for the country could mean greater exposure to supply chain disruptions that could increase the cost of doing business.” The report was released as BOC Governor Tiff Macklem testified before a Canadian Senate banking committee last Wednesday. He said the country needs to invest more in its transportation infrastructure, citing the ability of Southern California ports to handle much larger vessels than those calling Canada. The Bank of Canada researchers said some of the country’s declining port connectivity may stem from fewer, larger container ships than those measured in 2016. More of those larger ships, though, head to US West Coast ports, with imports into Canada having to absorb the extra cost of surface transportation from Southern California. “Many imports coming on larger ships from southeast Asia, for example, must first travel to and be processed through the Port of Los Angeles before being shipped to Canada by train or truck,” the BOC report said. The Port of Vancouver only sees about half or fewer of the large container ships on the trans-Pacific than the Southern California ports, according to data from Sea-web, a sister product of the Journal of Commerce within S&amp;P Global. In the last 12 months, ships over 11,000 TEUs in capacity made 410 calls to the Port of Los Angeles and 308 calls to Long Beach, Sea-web data shows. Vancouver saw 143 such calls over the same time. <h3>Multiple projects planned </h3><a href="https://www.joc.com/article/canada-looks-for-new-container-gateways-for-decoupling-from-us-6122714">Canada’s government wants to reduce that dependency on Southern California ports</a>, along with the US overall as a trading partner. Prime Minister Mark Carney has pledged some C$5 billion in federal funding for trade infrastructure projects, including ports. The biggest pieces of that will be the Contrecoeur marine terminal at the Port of Montreal, which has <a href="https://www.joc.com/article/dp-world-to-build-big-ship-container-terminal-in-montreal-6077326">started initial work on the C$1.6 billion project</a>. Quebec may become home to another marine terminal after local operator <a href="https://www.joc.com/article/customs-designation-triggers-qsl-terminal-project-in-quebec-city-6209525">QSL received preliminary approval</a> from Canada’s customs agency for receiving international freight at the proposed site at Quebec City. DP World Canada has also unveiled <a href="https://www.joc.com/article/canadas-port-of-saint-john-ready-for-larger-ships-more-containers-6152491">a new ultra-large container ship berth</a> at its Port Saint John terminal. On the country’s West Coast, the Vancouver Fraser Port Authority and Global Container Terminals have pledged to work together on <a href="https://www.joc.com/article/gct-vancouver-port-to-jointly-study-roberts-bank-terminal-project-6207642">studying development of the proposed 2.4 million-TEU Roberts Bank marine terminal</a>. Outside of infrastructure, Canada also wants to turn the tide on the <a href="https://www.joc.com/article/bc-montreal-ports-set-to-reopen-under-orders-from-canadas-labor-chief-5792214">longshore labor disruption that has plagued its ports</a>. Canada’s parliament <a href="https://www.joc.com/article/canadian-review-of-labor-laws-linked-to-hoped-for-longshore-peace-us-diversification-6211387">could take up negotiations in the coming weeks</a> on how to reform the country’s labor laws. Changes to those laws could come ahead of the 2027 expiration of the longshore labor contract at Vancouver. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Canada’s ports are less connected globally than a decade ago, exposing the country’s shippers to more supply chain risk, its central bank says. The warning comes as the country pivots its trade relations away from the US amid plans to invest billions in its ports. The Bank of Canada (BOC), in a research report published last week, showed that the country’s five largest ports have seen major declines in their connections to other global ports since 2016. The researchers used satellite data of container ship and car carrier transits to measure the number of unique destinations. That connectivity measure dropped 74% between 2016 and 2023, indicating “Canadian ports became relatively less central in global shipping networks compared with what they once were,” the BOC’s researchers said. “Global maritime shipping networks have been reshaped in ways that have reduced Canada’s relative connectivity and carrying capacity,” the bank said. “This less-central role for the country could mean greater exposure to supply chain disruptions that could increase the cost of doing business.” The report was released as BOC Governor Tiff Macklem testified before a Canadian Senate banking committee last Wednesday. He said the country needs to invest more in its transportation infrastructure, citing the ability of Southern California ports to handle much larger vessels than those calling Canada. The Bank of Canada researchers said some of the country’s declining port connectivity may stem from fewer, larger container ships than those measured in 2016. More of those larger ships, though, head to US West Coast ports, with imports into Canada having to absorb the extra cost of surface transportation from Southern California. “Many imports coming on larger ships from southeast Asia, for example, must first travel to and be processed through the Port of Los Angeles before being shipped to Canada by train or truck,” the BOC report said. The Port of Vancouver only sees about half or fewer of the large container ships on the trans-Pacific than the Southern California ports, according to data from Sea-web, a sister product of the Journal of Commerce within S&P Global. In the last 12 months, ships over 11,000 TEUs in capacity made 410 calls to the Port of Los Angeles and 308 calls to Long Beach, Sea-web data shows. Vancouver saw 143 such calls over the same time. Multiple projects planned Canada’s government wants to reduce that dependency on Southern California ports , along with the US overall as a trading partner. Prime Minister Mark Carney has pledged some C$5 billion in federal funding for trade infrastructure projects, including ports. The biggest pieces of that will be the Contrecoeur marine terminal at the Port of Montreal, which has started initial work on the C$1.6 billion project . Quebec may become home to another marine terminal after local operator QSL received preliminary approval from Canada’s customs agency for receiving international freight at the proposed site at Quebec City. DP World Canada has also unveiled a new ultra-large container ship berth at its Port Saint John terminal. On the country’s West Coast, the Vancouver Fraser Port Authority and Global Container Terminals have pledged to work together on studying development of the proposed 2.4 million-TEU Roberts Bank marine terminal . Outside of infrastructure, Canada also wants to turn the tide on the longshore labor disruption that has plagued its ports . Canada’s parliament could take up negotiations in the coming weeks on how to reform the country’s labor laws. Changes to those laws could come ahead of the 2027 expiration of the longshore labor contract at Vancouver. Contact Michael Angell at michael.angell@spglobal.com .

Trans-Pacific

North American ports

Eroding connections expose Canada’s ports, shippers: central bank

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