<div class="phx-topic abstract-wrapper">Despite private sector-based gains, the Surface Transportation Board, the agency in charge of overseeing private US freight railroads, has taken steps to impose onerous regulations on railroad operators that would erase much of the industry’s progress over the last 40 years.</div>

Despite private sector-based gains, the Surface Transportation Board, the agency in charge of overseeing private US freight railroads, has taken steps to impose onerous regulations on railroad operators that would erase much of the industry’s progress over the last 40 years.

<div>Proposed US federal railroad regulations ignore economic realities and historical lessons learned — and consumers will pay the price, according to <a>a new report</a> from the American Consumer Institute.Reforms to US railroad regulations in the late 1970s that ended route and rate controls reinvigorated an industry that was on the brink of financial collapse with many notable rail bankruptcies, such as the Penn Central Transportation Company. After decades of harmful government regulation, prices were soaring, even as service quality declined.Since railroad deregulation, freight rates have decreased by 45 percent. Economists estimate that these regulatory changes delivered massive benefits, saving consumers...

Proposed US federal railroad regulations ignore economic realities and historical lessons learned — and consumers will pay the price, according to a new report from the American Consumer Institute. Reforms to US railroad regulations in the late 1970s that ended route and rate controls reinvigorated an industry that was on the brink of financial collapse with many notable rail bankruptcies, such as the Penn Central Transportation Company. After decades of harmful government regulation, prices were soaring, even as service quality declined. Since railroad deregulation, freight rates have decreased by 45 percent. Economists estimate that these regulatory changes delivered massive benefits, saving consumers up to $10 billion annually. Despite these gains, the Surface Transportation Board (STB), the agency in charge of overseeing private US freight railroads, has taken steps to impose onerous regulations on railroad operators that would erase much of the industry’s progress over the last 40 years. The STB is considering a proposal to ease restrictions on forced switching, a practice that requires a railroad operator to allow competitors to dump traffic onto its privately owned and maintained rails at potentially below-market rates. Forced switching has historically been viewed as a last resort to protect captive shippers from anticompetitive actions by railroads; and since its inception, regulators have never found sufficient reason to invoke this remedy. Not once. However in 2011, at the behest of a lobbying group, the National Industrial Transportation League, the STB opened a proceeding to consider making forced switching easier to use as a regulatory intervention. In 2016, the STB issued an order on forced switching in line with what the lobbying group had requested. Making matters worse, the language of the proposal is so vague and imprecise that it opens the door to wide regulatory discretion. No evidence regulatory measures are needed Let’s be clear: there is no evidence that these regulatory measures are needed to correct a market failure in the railroad industry. Competition in the industry is intense; shippers use various competitive rail lines as well as other modes of transport — trucks, airplanes, pipelines, and ships/barges — all of which keep shipping prices low for consumers. In fact, average railroad prices have not increased as fast as the prices of other goods and generally have increased at a slower pace than other forms of transportation. Interestingly, the STB’s own independent economic analysis found no evidence of price gouging by railroad operators and warned that forcing competition would likely “threaten railroad financial viability.” Fundamentally, forced switching compels railroad operators to subsidize would-be rivals and shippers through below-cost wholesale rates, irrespective of the relationship between expected costs, revenues, and cash flows. Imposing forced switching rules would create ambiguity, reduce transparency, and make forecasting costs and revenues more difficult. Short-term regulatory decisions do not create an environment conducive for investments that last many decades. As a result, investment in the rail industry would decline, along with a decrease output and a deterioration in service quality and safety. Rising rail prices would lead shippers to rely more on trucking, which would increase the cost of highway maintenance borne by taxpayers, as well as lead to adverse environmental consequences. In the end, consumers will pay more for less. In light of these risks, the STB has a responsibility to offer the public a clear and transparent economic justification for its actions. Without some evidence of systematic market failure, implementing these new rules would amount to regulatory malpractice — regulating for the sake of regulating. The STB should remember the lessons of history and the high costs unnecessary regulations impose on consumers. Liam Sigaud is writer for the American Consumer Institute, a nonprofit educational and research organization.

Rail News

North-American rail

US shippers lose if US railroad regulations are approved

<div class="phx-topic abstract-wrapper">The combination of AAA Cooper Transportation, Midwest Motor Express and Dependable Highway Express covers the US LTL market coast-to-coast, except for the Northeast. </div>

The combination of AAA Cooper Transportation, Midwest Motor Express and Dependable Highway Express covers the US LTL market coast-to-coast, except for the Northeast.

Feature image

<div class="phx-topic">Knight-Swift is unifying its three less-than-truckload (LTL) subsidiaries under the AAA Cooper Transportation (ACT) brand, reflecting a back-office integration the company says is complete. The rebranding is the next step in the development of Knight-Swift as a coast-to-coast LTL provider, with terminals in most US regions except the Northeast. As of Jan. 1, Midwest Motor Express (MME) and Dependable Highway Express (DHE) will become ACT, Knight-Swift CEO Adam Miller told Wall Street analysts Wednesday. “The consolidated branding recognizes that we are already one business operating seamlessly on one system through one network,” Miller said during an earnings call. That network is still growing, but <a href="https://www.joc.com/article/knight-swift-puts-ltl-buyouts-on-hold-as-us-freight-market-flattens-5928140">not as quickly as last year</a>, when Knight-Swift <a href="https://www.joc.com/article/knight-swift-acquisition-expands-ltl-network-coast-to-coast-5703164">acquired DHE</a> and added 51 terminals, including DHE facilities and former Yellow properties. The company opened one new LTL terminal in this third quarter and replaced two others with larger facilities. Knight-Swift’s LTL door count increased 10.2% year over year. The LTL segment of Knight-Swift increased revenue 21.5% in the third quarter to $340.5 million, with its top line bolstered by the DHE acquisition in the third quarter of 2024. The three regional LTLs increased their combined shipment volume 14.2% from a year ago in this Q3, again thanks in part to the addition of DHE, boosting overall revenue. Knight-Swift’s LTL segment would have had a $27.1 million operating profit, but a $28.8 million goodwill charge related to the rebranding led to a $1.7 million operating loss. Despite <a href="https://www.joc.com/article/ltl-carriers-push-general-rate-hikes-despite-lackluster-us-freight-demand-6101838">market weakness</a>, “we are capturing growth opportunities with new LTL customers as well as from some of our long-standing truckload customers,” Miller said. <h3>LTL realignment </h3>The integration and rebranding of the LTL carriers Knight-Swift began acquiring in 2021 could put the company in a better competitive position in <a href="https://www.joc.com/article/journal-of-commerce-rankings-us-ltl-sector-defies-soft-demand-regains-traction-6010008">an evolving LTL market</a>. Following the collapse of Yellow in July 2023, companies such as Estes Express Lines, R+L Carriers and Saia have risen higher among the top 10 carriers ranked by revenue. Estes was the fifth-largest LTL carrier in 2022 and is now ranked third. R+L was eighth and is now ranked fifth, while Saia rose from ninth-ranked in 2022 to sixth last year. Knight-Swift’s LTL segment ranks 12th on the current Journal of Commerce/SJ Consulting Group list of top 25 US LTL trucking companies, with $1.07 billion in 2024 revenue. Year-over-year comparisons in revenue and volume are likely to get tougher as the DHE acquisition fades from view starting in the fourth quarter, which so far has been weak. “LTL demand appears softer than the normal fourth quarter seasonal slowdown,” Knight-Swift CFO Andrew Hess said during the earnings call. Contact William B. Cassidy at <a href="mailto://bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. </div>

Knight-Swift is unifying its three less-than-truckload (LTL) subsidiaries under the AAA Cooper Transportation (ACT) brand, reflecting a back-office integration the company says is complete. The rebranding is the next step in the development of Knight-Swift as a coast-to-coast LTL provider, with terminals in most US regions except the Northeast. As of Jan. 1, Midwest Motor Express (MME) and Dependable Highway Express (DHE) will become ACT, Knight-Swift CEO Adam Miller told Wall Street analysts Wednesday. “The consolidated branding recognizes that we are already one business operating seamlessly on one system through one network,” Miller said during an earnings call. That network is still growing, but not as quickly as last year , when Knight-Swift acquired DHE and added 51 terminals, including DHE facilities and former Yellow properties. The company opened one new LTL terminal in this third quarter and replaced two others with larger facilities. Knight-Swift’s LTL door count increased 10.2% year over year. The LTL segment of Knight-Swift increased revenue 21.5% in the third quarter to $340.5 million, with its top line bolstered by the DHE acquisition in the third quarter of 2024. The three regional LTLs increased their combined shipment volume 14.2% from a year ago in this Q3, again thanks in part to the addition of DHE, boosting overall revenue. Knight-Swift’s LTL segment would have had a $27.1 million operating profit, but a $28.8 million goodwill charge related to the rebranding led to a $1.7 million operating loss. Despite market weakness , “we are capturing growth opportunities with new LTL customers as well as from some of our long-standing truckload customers,” Miller said. LTL realignment The integration and rebranding of the LTL carriers Knight-Swift began acquiring in 2021 could put the company in a better competitive position in an evolving LTL market . Following the collapse of Yellow in July 2023, companies such as Estes Express Lines, R+L Carriers and Saia have risen higher among the top 10 carriers ranked by revenue. Estes was the fifth-largest LTL carrier in 2022 and is now ranked third. R+L was eighth and is now ranked fifth, while Saia rose from ninth-ranked in 2022 to sixth last year. Knight-Swift’s LTL segment ranks 12th on the current Journal of Commerce/SJ Consulting Group list of top 25 US LTL trucking companies, with $1.07 billion in 2024 revenue. Year-over-year comparisons in revenue and volume are likely to get tougher as the DHE acquisition fades from view starting in the fourth quarter, which so far has been weak. “LTL demand appears softer than the normal fourth quarter seasonal slowdown,” Knight-Swift CFO Andrew Hess said during the earnings call. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Surface

Knight-Swift combining LTL subsidiaries to form one carrier under ACT brand

<div class="phx-topic abstract-wrapper">The New Jersey-based carrier believes its vessels should be treated as container ships given that 80% of their cargo is containerized, but a USTR designation that would classify the ships as vehicle carriers means the company faces hefty US port fees.</div>

The New Jersey-based carrier believes its vessels should be treated as container ships given that 80% of their cargo is containerized, but a USTR designation that would classify the ships as vehicle carriers means the company faces hefty US port fees.

<div class="phx-topic">US-headquartered Atlantic Container Line (ACL) is “reviewing all options” after its China-built vessels were classified as vehicle carriers under new guidance from the US Trade Representative (USTR), setting the company up for a potential hit of $35 million each year in US port fees. Andrew Abbott, CEO of the New Jersey-based carrier, would not be drawn on the company’s possible alternatives when contacted by the Journal of Commerce Thursday. “We are reviewing all of the options at the moment,” Abbott said. “We are not giving up.” Options include cutting some US port calls altogether or favoring alternatives in Canada and Mexico. Other possibilities include swapping vessels with ACL parent company Grimaldi Group, investing in non-China-built ships or passing the new costs on to customers with surcharges or higher freight rates. ACL’s weekly trans-Atlantic services already call at Canada’s Halifax, along with New York, Baltimore and Norfolk. A further possibility is to reflag ACL’s ships in the US, a move that would exempt them from the port fees but is seen as an expensive option because it would require US crews. ACL operates a fleet of five container vessel roll-on/roll-off (con-ro) ships that have a capacity of 3,800 TEUs and multiple decks for roll-on/roll-off (ro/ro) and high and heavy cargo covering 311,000 square feet. The carrier believes the vessels should be treated as container ships given that 80% of their cargo is containerized, with another 9% breakbulk that is moved on platforms and the remaining 12% either rollable equipment or cars. By comparison, automobiles made up 30% of the cargo carried by container lines to and from the US East Coast and Europe in the first five months of this year, Abbott said, quoting data from PIERS, a sister company of the Journal of Commerce within S&amp;P Global. <h3>Customers are ‘incredulous’ </h3>In a Federal Register notice published Oct. 16, the USTR clarified that its definition of a vehicle carrier is based on the International Maritime Organization’s (IMO) international classification of ship types. Vehicle carriers are subject to a US fee of $46 per net ton. Highlighting the impact of the USTR’s decision, Abbot said each of ACL’s ships would face a port fee of $1.4 million every time they made an initial call at a US port, capped at five calls by the same vessel a year. “That’s 25 vessels being charged $1.4 million a year,” Abbott told CNBC Wednesday. Last week’s Federal Register notice said carriers could defer payment of the charges until Dec. 10 while the USTR considers changes to its port fee measures that affect vehicle carriers and other ship types. Operators must self-report a ship’s arrival and pay the port fee to US Customs and Border Protection (CBP) before the vessel docks, with CBP serving as the USTR’s collection agency, but neither USTR nor CBP has made clear the process for deferring port charges. Abbot told CNBC that one of ACL’s ships has already paid the port fee after docking at a US port the same day charges took effect on Oct. 14. Abbott said customers are “incredulous” that ACL is being charged port fees, noting that importers are already dealing with the financial burden of tariffs and that passing along the extra cost of port fees could jeopardize the carrier’s business. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

US-headquartered Atlantic Container Line (ACL) is “reviewing all options” after its China-built vessels were classified as vehicle carriers under new guidance from the US Trade Representative (USTR), setting the company up for a potential hit of $35 million each year in US port fees. Andrew Abbott, CEO of the New Jersey-based carrier, would not be drawn on the company’s possible alternatives when contacted by the Journal of Commerce Thursday. “We are reviewing all of the options at the moment,” Abbott said. “We are not giving up.” Options include cutting some US port calls altogether or favoring alternatives in Canada and Mexico. Other possibilities include swapping vessels with ACL parent company Grimaldi Group, investing in non-China-built ships or passing the new costs on to customers with surcharges or higher freight rates. ACL’s weekly trans-Atlantic services already call at Canada’s Halifax, along with New York, Baltimore and Norfolk. A further possibility is to reflag ACL’s ships in the US, a move that would exempt them from the port fees but is seen as an expensive option because it would require US crews. ACL operates a fleet of five container vessel roll-on/roll-off (con-ro) ships that have a capacity of 3,800 TEUs and multiple decks for roll-on/roll-off (ro/ro) and high and heavy cargo covering 311,000 square feet. The carrier believes the vessels should be treated as container ships given that 80% of their cargo is containerized, with another 9% breakbulk that is moved on platforms and the remaining 12% either rollable equipment or cars. By comparison, automobiles made up 30% of the cargo carried by container lines to and from the US East Coast and Europe in the first five months of this year, Abbott said, quoting data from PIERS, a sister company of the Journal of Commerce within S&P Global. Customers are ‘incredulous’ In a Federal Register notice published Oct. 16, the USTR clarified that its definition of a vehicle carrier is based on the International Maritime Organization’s (IMO) international classification of ship types. Vehicle carriers are subject to a US fee of $46 per net ton. Highlighting the impact of the USTR’s decision, Abbot said each of ACL’s ships would face a port fee of $1.4 million every time they made an initial call at a US port, capped at five calls by the same vessel a year. “That’s 25 vessels being charged $1.4 million a year,” Abbott told CNBC Wednesday. Last week’s Federal Register notice said carriers could defer payment of the charges until Dec. 10 while the USTR considers changes to its port fee measures that affect vehicle carriers and other ship types. Operators must self-report a ship’s arrival and pay the port fee to US Customs and Border Protection (CBP) before the vessel docks, with CBP serving as the USTR’s collection agency, but neither USTR nor CBP has made clear the process for deferring port charges. Abbot told CNBC that one of ACL’s ships has already paid the port fee after docking at a US port the same day charges took effect on Oct. 14. Abbott said customers are “incredulous” that ACL is being charged port fees, noting that importers are already dealing with the financial burden of tariffs and that passing along the extra cost of port fees could jeopardize the carrier’s business. Contact Keith Wallis at keithwallis@hotmail.com .

Transport, Trade and Regulation News

Ro/ro cargo

Container lines

Trans-Atlantic

Container Shipping News

Maritime

ACL weighs options after facing annual $35 million USTR port bill

<div class="phx-topic abstract-wrapper">Union Pacific’s application seeking federal approval to acquire Norfolk Southern will be 4,000 pages long and provide the first detailed look at how the railroads believe customers would benefit from the $85 billion deal.</div>

Union Pacific’s application seeking federal approval to acquire Norfolk Southern will be 4,000 pages long and provide the first detailed look at how the railroads believe customers would benefit from the $85 billion deal.

<div class="phx-topic">Union Pacific Railroad (UP) wants to submit its 4,000-page application to acquire Norfolk Southern Railway (NS) to federal regulators by Dec. 1, UP’s CEO said Thursday, an ambitious deadline for a merger that would create the US’ first transcontinental railroad. The filing to the US Surface Transportation Board (STB) will detail how the combined carrier would move freight more efficiently across the country, taking thousands of trucks off the highways. UP will include reports from consultants and data to support its position that the $85 billion transaction will enhance, not harm, competition. “If you ask Jim Vena, I want the application in before the first of December,” Vena said on UP’s third-quarter earnings call. “If you talk to some people on our team, they’re going to say, ‘geez, Jim, would you give us a bit of time?’ And the answer is ‘no.’ So, I’m hoping that we can do everything we can to have it in by the end of November, or at the latest early December.” Once filed, the formal application would kick-start a flurry of public comments filed to the STB by other railroads, shipper associations and local communities. UP has already secured a major victory with the <a href="https://www.joc.com/article/major-rail-union-backs-up-ns-merger-after-job-protection-deal-6084510">support of the largest rail union</a> — the Sheet Metal Workers Air, Rail, and Transportation (SMART-TD) — and is negotiating with other unions. <h3>BNSF vs. UP battle shaping up </h3>As Vena pushes an ambitious timeline for the NS deal, competitor BNSF Railway has spent weeks building a case that the merger would harm shippers who depend on intermodal rail. Canadian Pacific Kansas City and the American Chemistry Council have also come out against the deal. BNSF warns that the UP-NS combination would eliminate about 300 intermodal lanes nationwide, including Southern California to the Northeast, by dissolving longstanding interchange partnerships such as BNSF-NS and UP-CSX. Eliminating a BNSF-NS partnership would require J.B. Hunt Transport Services, the largest US intermodal provider, to explore other options, as it is a partner of both railroads. Shippers, according to BNSF, would also see higher rates, fewer routes with two rail options, and less flexibility to reroute freight during network congestion. The railroad is urging its customers to tell the STB that the risks of the UP-NS coupling outweigh the promises of enhanced service. Vena denied those claims during Thursday’s call. “We’re not going to remove 300 lanes of traffic,” he said. “[BNSF knows] we’re going to have more options for our customers, not less.” UP also said interchanges with CSX will not be eliminated; the interchanges are a critical link for customers of Schneider National, STG Logistics and freight brokers using rail boxes labeled “UMA­X.” “We’re going to completely support the UMAX product,” Kenny Rocker, UP’s executive vice president of marketing and sales, said on the earnings call. “It is a strong, viable intermodal product that our customers are utilizing daily and that’s not going away.” BNSF said it believes in collaboration, not consolidation, like it has done with CSX recently. The two railroads have introduced new services from <a href="https://www.joc.com/article/bnsf-csx-unveil-new-joint-intermodal-lanes-in-aftermath-of-up-ns-merger-6067789">Southern California to Charlotte, North Carolina, and Jacksonville, Florida,</a> plus a train from Phoenix to Atlanta. Once double-stack intermodal service begins in Baltimore <a href="https://www.joc.com/article/csx-restarts-baltimore-tunnel-service-for-double-stack-in-2026-6087384">next spring</a>, BNSF and CSX could explore a similar train from Southern California to New Jersey. “The unfortunate truth is that the (UP-NS) proposal itself does not result in significant new investments or improvements to the US rail network,” BNSF wrote in a set of talking points about the merger obtained by the Journal of Commerce. “Instead, it facilitates a Wall Street financial transaction that actually pulls money out of the railroad industry and into the pockets of activist Wall Street investors. That does not help the US economy in the short or long run.” Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

Union Pacific Railroad (UP) wants to submit its 4,000-page application to acquire Norfolk Southern Railway (NS) to federal regulators by Dec. 1, UP’s CEO said Thursday, an ambitious deadline for a merger that would create the US’ first transcontinental railroad. The filing to the US Surface Transportation Board (STB) will detail how the combined carrier would move freight more efficiently across the country, taking thousands of trucks off the highways. UP will include reports from consultants and data to support its position that the $85 billion transaction will enhance, not harm, competition. “If you ask Jim Vena, I want the application in before the first of December,” Vena said on UP’s third-quarter earnings call. “If you talk to some people on our team, they’re going to say, ‘geez, Jim, would you give us a bit of time?’ And the answer is ‘no.’ So, I’m hoping that we can do everything we can to have it in by the end of November, or at the latest early December.” Once filed, the formal application would kick-start a flurry of public comments filed to the STB by other railroads, shipper associations and local communities. UP has already secured a major victory with the support of the largest rail union — the Sheet Metal Workers Air, Rail, and Transportation (SMART-TD) — and is negotiating with other unions. BNSF vs. UP battle shaping up As Vena pushes an ambitious timeline for the NS deal, competitor BNSF Railway has spent weeks building a case that the merger would harm shippers who depend on intermodal rail. Canadian Pacific Kansas City and the American Chemistry Council have also come out against the deal. BNSF warns that the UP-NS combination would eliminate about 300 intermodal lanes nationwide, including Southern California to the Northeast, by dissolving longstanding interchange partnerships such as BNSF-NS and UP-CSX. Eliminating a BNSF-NS partnership would require J.B. Hunt Transport Services, the largest US intermodal provider, to explore other options, as it is a partner of both railroads. Shippers, according to BNSF, would also see higher rates, fewer routes with two rail options, and less flexibility to reroute freight during network congestion. The railroad is urging its customers to tell the STB that the risks of the UP-NS coupling outweigh the promises of enhanced service. Vena denied those claims during Thursday’s call. “We’re not going to remove 300 lanes of traffic,” he said. “[BNSF knows] we’re going to have more options for our customers, not less.” UP also said interchanges with CSX will not be eliminated; the interchanges are a critical link for customers of Schneider National, STG Logistics and freight brokers using rail boxes labeled “UMA­X.” “We’re going to completely support the UMAX product,” Kenny Rocker, UP’s executive vice president of marketing and sales, said on the earnings call. “It is a strong, viable intermodal product that our customers are utilizing daily and that’s not going away.” BNSF said it believes in collaboration, not consolidation, like it has done with CSX recently. The two railroads have introduced new services from Southern California to Charlotte, North Carolina, and Jacksonville, Florida, plus a train from Phoenix to Atlanta. Once double-stack intermodal service begins in Baltimore next spring , BNSF and CSX could explore a similar train from Southern California to New Jersey. “The unfortunate truth is that the (UP-NS) proposal itself does not result in significant new investments or improvements to the US rail network,” BNSF wrote in a set of talking points about the merger obtained by the Journal of Commerce. “Instead, it facilitates a Wall Street financial transaction that actually pulls money out of the railroad industry and into the pockets of activist Wall Street investors. That does not help the US economy in the short or long run.” Contact Ari Ashe at ari.ashe@spglobal.com .

Intermodal providers

UP CEO pushing to file formal NS merger application by Dec. 1

<div class="phx-topic abstract-wrapper">Tender season is a time when shippers traditionally look to switch forwarders, so signing them to new contracts will be the real test of the DSV-DB Schenker integration, DSV CFO Michael Ebbe says.</div>

Tender season is a time when shippers traditionally look to switch forwarders, so signing them to new contracts will be the real test of the DSV-DB Schenker integration, DSV CFO Michael Ebbe says.

<div class="phx-topic">DSV said Thursday it is stepping up efforts to retain its customer base amid the integration of DB Schenker into its global network as ocean tender season approaches and rival Kuehne + Nagel begins to circle. Cargo owners will soon begin to negotiate Asia–Europe contracts for next year, with the annual service contract talks on the trans-Pacific heating up in March. It is a time when shippers traditionally switch forwarders, so signing them to new contracts will be the real test of the DSV-DB Schenker integration, according to DSV CFO Michael Ebbe. “All the competition is focusing on us right now, but we are the market leaders, and we also did that when we were chasing,” Ebbe told analysts during a third-quarter earnings call. “We'd see quite some attrition by now in a normal integration, which we're not seeing, but the tender season will be the test.” At $16.25 billion, DB Schenker is Denmark-based DSV’s largest acquisition by a huge margin, after having previously taken over <a href="https://www.joc.com/article/size-equals-value-in-fragmented-market-dsvs-andersen-5248808">Agility’s Global Integrated Logistics (GIL) in 2021 for $4.2 billion</a>, <a href="https://www.joc.com/article/newly-combined-dsv-panalpina-targets-trans-pacific-trade-5226703">Panalpina in 2019 for $4.6 billion</a> and <a href="https://www.joc.com/article/dsv-buys-uti-for-135-billion-5205537">UTi in 2015 for $1.35 billion</a>. While exact figures are not available, DSV has previously acknowledged that following the Panalpina and GIL acquisitions, there were some large customer losses to rivals. “Of the customers that we have longer-term agreements with, it's going to come when we have the freight negotiations, basically for the renewal of the contracts, and that's typically happening into the new year,” Ebbe said. “We must make it through the tender season, and then we can really start to focus on the growth.” But also waiting for ocean tender season is rival Kuehne + Nagel, and the Swiss-based forwarder claimed during its own Q3 call Thursday to have already made inroads into DSV’s air freight customer base. “I can confirm we have taken advantage of that merger in air freight, and it has benefited us,” K + N CEO Stefan Paul told analysts. Paul said ocean freight came with two cargo request-for-quotation (RFQ) cycles while air freight shippers decided on a monthly or quarterly basis. “The share of wallet has moved much quicker on the air freight business where the purchasing guidance is more obvious than in sea freight, but that should come in the next RFQ cycle,” he said. <h3>Global headwinds hit forwarder results </h3>Both DSV and Kuehne + Nagel in their Q3 results highlighted significant global headwinds fanned by US tariffs and geopolitics. Boosted by the DB Schenker business, DSV’s Q3 revenue reached $11.7 billion, up 63% year over year, while gross profit increased 76% to $3 billion. Earnings before interest and taxes (EBIT) were up 23% at $842 million, while net profit of $335 million was down 24% year over year. Volume became increasingly volatile during the third quarter, particularly in ocean freight. Although overall volume was up 52% at just over 1 million TEUs, 404,000 TEUs of that was contributed by DB Schenker. Organic volume that excluded Schenker was down 5% year over year. In air freight, the volume grew 64% in the third quarter to 579,000 metric tons, with DB Schenker contributing 232,000 metric tons. Organic volume was flat. DSV reiterated that expected synergies from DB Schenker would be about $1.4 billion by the end of 2028, with an expected financial cost of about $124 million for the full-year 2025 based on the assumption that 30% of the integration will be completed by year-end. DSV has lowered the top range of its full-year profit expectation from $3.34 billion to $3.19 billion but maintained its lower EBIT level at $3.05 billion. <h3>K + N to slash jobs as yield pressure grows </h3>Kuehne + Nagel also lowered its EBIT forecast, and now expects profit of $1.6 billion in 2025, down from the previous expectation of just over $2 billion. The forwarder said overcapacity in the ocean trade, negative currency effects and a drop in volume in the third quarter were placing heavy pressure on air and ocean yields. Third-quarter revenue of $7.6 billion was down 7% year over year, EBIT of $358 million declined 37% and net profit was down 36% at $259 million. K + N handled 1.1 million TEUs in the third quarter, flat compared with the same period last year. But the excess ocean capacity dragged down gross profit per TEU by 15% to $688. In air freight, the forwarder handled 564,000 metric tons, up 7% year over year, although gross profit per 100 kilograms fell 13% to $90. Kuehne + Nagel aims to mitigate its declining profitability through cost cuts of $251 million that will see between 1,000 and 1,500 jobs lost as the forwarder increases automation and digitalization across its global network. “Challenging external factors are forcing us to sustainably and permanently improve our efficiency and performance culture,” Paul noted. “With the launch of group-wide cost reduction measures, we are now taking action to safeguard our cost base.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

DSV said Thursday it is stepping up efforts to retain its customer base amid the integration of DB Schenker into its global network as ocean tender season approaches and rival Kuehne + Nagel begins to circle. Cargo owners will soon begin to negotiate Asia–Europe contracts for next year, with the annual service contract talks on the trans-Pacific heating up in March. It is a time when shippers traditionally switch forwarders, so signing them to new contracts will be the real test of the DSV-DB Schenker integration, according to DSV CFO Michael Ebbe. “All the competition is focusing on us right now, but we are the market leaders, and we also did that when we were chasing,” Ebbe told analysts during a third-quarter earnings call. “We'd see quite some attrition by now in a normal integration, which we're not seeing, but the tender season will be the test.” At $16.25 billion, DB Schenker is Denmark-based DSV’s largest acquisition by a huge margin, after having previously taken over Agility’s Global Integrated Logistics (GIL) in 2021 for $4.2 billion , Panalpina in 2019 for $4.6 billion and UTi in 2015 for $1.35 billion . While exact figures are not available, DSV has previously acknowledged that following the Panalpina and GIL acquisitions, there were some large customer losses to rivals. “Of the customers that we have longer-term agreements with, it's going to come when we have the freight negotiations, basically for the renewal of the contracts, and that's typically happening into the new year,” Ebbe said. “We must make it through the tender season, and then we can really start to focus on the growth.” But also waiting for ocean tender season is rival Kuehne + Nagel, and the Swiss-based forwarder claimed during its own Q3 call Thursday to have already made inroads into DSV’s air freight customer base. “I can confirm we have taken advantage of that merger in air freight, and it has benefited us,” K + N CEO Stefan Paul told analysts. Paul said ocean freight came with two cargo request-for-quotation (RFQ) cycles while air freight shippers decided on a monthly or quarterly basis. “The share of wallet has moved much quicker on the air freight business where the purchasing guidance is more obvious than in sea freight, but that should come in the next RFQ cycle,” he said. Global headwinds hit forwarder results Both DSV and Kuehne + Nagel in their Q3 results highlighted significant global headwinds fanned by US tariffs and geopolitics. Boosted by the DB Schenker business, DSV’s Q3 revenue reached $11.7 billion, up 63% year over year, while gross profit increased 76% to $3 billion. Earnings before interest and taxes (EBIT) were up 23% at $842 million, while net profit of $335 million was down 24% year over year. Volume became increasingly volatile during the third quarter, particularly in ocean freight. Although overall volume was up 52% at just over 1 million TEUs, 404,000 TEUs of that was contributed by DB Schenker. Organic volume that excluded Schenker was down 5% year over year. In air freight, the volume grew 64% in the third quarter to 579,000 metric tons, with DB Schenker contributing 232,000 metric tons. Organic volume was flat. DSV reiterated that expected synergies from DB Schenker would be about $1.4 billion by the end of 2028, with an expected financial cost of about $124 million for the full-year 2025 based on the assumption that 30% of the integration will be completed by year-end. DSV has lowered the top range of its full-year profit expectation from $3.34 billion to $3.19 billion but maintained its lower EBIT level at $3.05 billion. K + N to slash jobs as yield pressure grows Kuehne + Nagel also lowered its EBIT forecast, and now expects profit of $1.6 billion in 2025, down from the previous expectation of just over $2 billion. The forwarder said overcapacity in the ocean trade, negative currency effects and a drop in volume in the third quarter were placing heavy pressure on air and ocean yields. Third-quarter revenue of $7.6 billion was down 7% year over year, EBIT of $358 million declined 37% and net profit was down 36% at $259 million. K + N handled 1.1 million TEUs in the third quarter, flat compared with the same period last year. But the excess ocean capacity dragged down gross profit per TEU by 15% to $688. In air freight, the forwarder handled 564,000 metric tons, up 7% year over year, although gross profit per 100 kilograms fell 13% to $90. Kuehne + Nagel aims to mitigate its declining profitability through cost cuts of $251 million that will see between 1,000 and 1,500 jobs lost as the forwarder increases automation and digitalization across its global network. “Challenging external factors are forcing us to sustainably and permanently improve our efficiency and performance culture,” Paul noted. “With the launch of group-wide cost reduction measures, we are now taking action to safeguard our cost base.” Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo Forwarder News

Air Cargo

Forwarding

Rival Kuehne + Nagel circles DSV customers as ocean tender season nears

<div class="phx-topic abstract-wrapper">Average spot rates from West India to the US East Coast have dropped by $400 to $500 per container over the last three weeks, according to new data from freight forwarders. </div>

Average spot rates from West India to the US East Coast have dropped by $400 to $500 per container over the last three weeks, according to new data from freight forwarders.

<div class="phx-topic">Ocean rates on the India-US trades continue to weaken as carriers contend with lower westbound bookings in a tariff-squeezed market environment. Average spot rates from West India to the US East Coast have dropped by $400 to $500 per container over the last three weeks, according to new data from freight forwarders. Sources have pegged rates from Nhava Sheva to New York at between $1,500 and $1,600 per FEU, down from $1,900 to $2,100 quoted by the lead operators on the trade at the end of September. Platts, a sister company of the Journal of Commerce within S&amp;P Global, put India-USEC spot rates at $1,550 per FEU as of Oct. 22, a 3% decline week on week. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="56199e2b-5df4-468f-a149-b18ae7c32e51"></dynamic-object></div>“Even many of the bigger European mainliners, typically at a higher price mark than cargo-hungry Asian liners, have leveled off to fill their vessels,” said a Mumbai-based forwarding executive who didn’t want to be identified. <h3>Tariffs hit volumes, too </h3>Meanwhile, the full impact of a 50% tariff on Indian imports into the US is now beginning to show up in trade data. To illustrate, Indian ready-made garment (RMG) exports, which have traditionally had the highest sourcing share from the US market, dropped sharply in September, down 10% by value year over year. That decline followed a modest 2.5% decrease in August. The US accounted for about 33% of the total Indian RMG export trade in 2024, data shows. The 50% US tariff on Indian exports became effective Aug. 27, making September the first month to capture the enormity of transactional trade dynamics rippling through supply chains. Data from PIERS, a sister product of the Journal of Commerce, shows the US East Coast imported 87,940 TEUs from India in September, down from 93,290 TEUs in August. Carrier sources generally agree that there has been a volume drop of between 30% and 35% since the tariff blow. While most larger US retailers have kept Indian buying generally steady, midsized buyers have cut back on their orders, sources say. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="ae1df54b-4003-46b5-a8c3-e0d35707e941"></dynamic-object></div>“The India-USEC trade has been negatively affected due to the 50% tariff levy,” Sanjay Tejwani, CEO of consulting firm 365 Logistics, told the Journal of Commerce. “This has adversely impacted vessel utilization and freight rates on this trade lane, and ocean carriers are trying to stabilize the freight market via blank sailings.” For October, forwarders have reported five void calls between CMA CGM’s “Indamex” and Ocean Network Express (ONE)’s WIN services. “The tariffs are weighing on (India-US) container volumes, but it’s hoped that a bilateral trade deal will emerge in the near future, setting a more vibrant market with tariffs lowered to something like 15% to 25%,” said Daniel Krassenstein, global supply chain director of US-based industrial packaging manufacturer Procon Pacific. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

Ocean rates on the India-US trades continue to weaken as carriers contend with lower westbound bookings in a tariff-squeezed market environment. Average spot rates from West India to the US East Coast have dropped by $400 to $500 per container over the last three weeks, according to new data from freight forwarders. Sources have pegged rates from Nhava Sheva to New York at between $1,500 and $1,600 per FEU, down from $1,900 to $2,100 quoted by the lead operators on the trade at the end of September. Platts, a sister company of the Journal of Commerce within S&P Global, put India-USEC spot rates at $1,550 per FEU as of Oct. 22, a 3% decline week on week. “Even many of the bigger European mainliners, typically at a higher price mark than cargo-hungry Asian liners, have leveled off to fill their vessels,” said a Mumbai-based forwarding executive who didn’t want to be identified. Tariffs hit volumes, too Meanwhile, the full impact of a 50% tariff on Indian imports into the US is now beginning to show up in trade data. To illustrate, Indian ready-made garment (RMG) exports, which have traditionally had the highest sourcing share from the US market, dropped sharply in September, down 10% by value year over year. That decline followed a modest 2.5% decrease in August. The US accounted for about 33% of the total Indian RMG export trade in 2024, data shows. The 50% US tariff on Indian exports became effective Aug. 27, making September the first month to capture the enormity of transactional trade dynamics rippling through supply chains. Data from PIERS, a sister product of the Journal of Commerce, shows the US East Coast imported 87,940 TEUs from India in September, down from 93,290 TEUs in August. Carrier sources generally agree that there has been a volume drop of between 30% and 35% since the tariff blow. While most larger US retailers have kept Indian buying generally steady, midsized buyers have cut back on their orders, sources say. “The India-USEC trade has been negatively affected due to the 50% tariff levy,” Sanjay Tejwani, CEO of consulting firm 365 Logistics, told the Journal of Commerce. “This has adversely impacted vessel utilization and freight rates on this trade lane, and ocean carriers are trying to stabilize the freight market via blank sailings.” For October, forwarders have reported five void calls between CMA CGM’s “Indamex” and Ocean Network Express (ONE)’s WIN services. “The tariffs are weighing on (India-US) container volumes, but it’s hoped that a bilateral trade deal will emerge in the near future, setting a more vibrant market with tariffs lowered to something like 15% to 25%,” said Daniel Krassenstein, global supply chain director of US-based industrial packaging manufacturer Procon Pacific. Contact Bency Mathew at bencyvmathew@gmail.com .

Trans-Pacific

No halt to rate declines on India-US trade amid tariff headwinds

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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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