<div class="phx-topic abstract-wrapper">The US trucking market is reinventing itself after a significant spot market correction, with larger contract carriers expecting steady freight demand through 2022 despite economic fears.</div>

The US trucking market is reinventing itself after a significant spot market correction, with larger contract carriers expecting steady freight demand through 2022 despite economic fears.

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<div>US shippers are finally getting some relief from sky-high trucking costs, but not in every segment or lane, and not as much relief as they’d like.Although spot truckload rates dropped significantly in the first half of the year, they may not drop much farther. Record-breaking contract rates have also weakened, but not by much, and not universally. That may be as good as it gets for shippers over the next few quarters.And new pressures now on the horizon could pump more demand into the US trucking market later in the third quarter or fourth quarter. A growing backlog of warehoused...

US shippers are finally getting some relief from sky-high trucking costs, but not in every segment or lane, and not as much relief as they’d like. Although spot truckload rates dropped significantly in the first half of the year, they may not drop much farther. Record-breaking contract rates have also weakened, but not by much, and not universally. That may be as good as it gets for shippers over the next few quarters. And new pressures now on the horizon could pump more demand into the US trucking market later in the third quarter or fourth quarter. A growing backlog of warehoused freight, much of it imported into the US earlier than usual this year, will eventually need to move toward its destination. Railroads are already metering capacity from the West Coast inland, which will generate more demand for trucks to move freight from ports and transloading facilities to the warehouses. Two full years after the recovery from the COVID-19 recession began in May 2020, the trucking market is as volatile and unpredictable as ever. It’s no longer “ crazy town ,” as it was called last year, but it’s neither sane nor sober, according to executives and analysts. More than ever before, the trucking outlook depends on whether you’re a shipper, a small or large carrier, or an intermediary. “There’s a lot of different opinions on what the next six months are going to look like coming from some of the shippers out there,” Jim Gattoni, CEO of truckload carrier Landstar System, said in a July 20 earnings call. “Some are thinking that the peak is going to be a little softer, some think it’s going to be terrific. Some are concerned that if it does get strong, they want to have capacity locked up.” “My gut is upside down because no one can tell me what’s going to happen,” Rob Brasher, chief commercial officer at Landstar, said during the same call, as transcribed by Seeking Alpha . Shippers are keeping Landstar and its thousands of owner-operators “real close because they don't want to get into a situation where they don't have capacity going into the third and fourth quarters,” Brasher said. An echoing boom For larger trucking companies, and some smaller ones, the boom times of the pandemic-induced consumer spending frenzy are not yet over, despite repeated warnings of imminent economic disaster. That’s clear in double-digit percentage increases in revenue and profit at publicly traded carriers. These are trucking companies that — regardless of their size — know their costs and are disciplined in their approach to pricing and what freight they haul. That goes for truckload and less-than-truckload (LTL) carriers alike. Although truckload capacity has loosened, thanks to the spot market correction in the first half of 2022, LTL capacity overall is still tight. Higher industrial demand is filling LTL trailers, LTL carriers are still adding doors and terminals, and acquisitions are helping those carriers fill niches and gaps in their coverage maps in 2022. Click to enlarge. Landstar, for example, increased its total revenue 26 percent year over year to $1.98 billion in the second quarter. The Jacksonville, Florida–based carrier became the largest truckload operator in the US and Canada by revenue in 2021, according to an analysis from SJ Consulting Group, which compiles the annual JOC Top 50 US and Canadian Truckload and Less-than-Truckload Carrier rankings. J.B. Hunt, the third-largest truckload provider, increased its total truckload segment revenue 46 percent to $269 million in the second quarter, while No. 2 Knight-Swift Transportation Holdings increased its truckload revenue, excluding fuel surcharges and intersegment transactions, 11.2 percent to $981.5 million. Some trucking companies see signs that seasonality is reasserting itself in mid-2022, although that doesn’t mean business or rates are getting “back to normal.” Recent freight flows suggest not a return to pre-COVID-19 levels or norms, but demand patterns that more closely resemble those norms. “I think we’re having a seasonally normal July,” Shelley Simpson, president of J.B. Hunt Transport Services since Aug. 1, said during a July 19 earnings call . In July, tonnage at Old Dominion Freight Line (ODFL) was “a little bit below normal seasonality,” CFO Adam Satterfield said in a second-quarter earnings call July 27 . Typically, LTL tonnage drops about 3 percent from June to July, one of the slower months of the year. “We’re a little bit below that, but comparing it back to 2019, we’re seeing a somewhat similar trend in July versus June.” In a more normal, pre-pandemic year, ODFL would expect freight volumes and tonnage to accelerate late in the third quarter. “Typically, September is our busiest month,” Satterfield said. And the carrier’s customers certainly aren’t pessimistic about demand, CEO Greg Gantt said during the call. “We’re still hearing overall that inventories are generally lower than they need to be,” Gantt said. “Many of our customers are still dealing with record numbers of back orders. They’re still dealing with labor issues and getting all the parts and pieces they need to produce finished products. We believe freight demand can continue to remain steady.” Smaller carriers, bigger concerns For some carriers, however, the outlook is darker. Those dependent on the truckload spot market are pressed between lower rates and higher fuel prices and operating costs. Owner-operators and small fleets unable to manage their freight and customer mix effectively enough to make even a meager profit will likely look to lease with a larger carrier or park their trucks until spot rates rise again. The rapid rise in fuel prices following Russia’s invasion of Ukraine hurt the bottom lines of these fleets as much as falling spot rates. Many of them accept all-in rates from brokers that don’t include fuel surcharges, or include surcharges that don’t rise to match the increase in fuel costs. Still, there are many smaller trucking companies that are just as profitable as their larger counterparts. “Being small doesn’t mean you can’t make money,” said Satish Jindel, president of SJ Consulting Group. “Making money is not a function of size; it’s a function of competence. You need complete clarity on your costs.” Carriers also need the ability to charge a price that supports reinvestment in the business and to change that business as the market changes, abilities some smaller carriers don’t have. Shippers who would have gladly paid $4 per mile on the spot market last year just to get freight off their docks and moving are rare this year. They’re tendering that freight to contract carriers for slightly less than they paid last year. Shippers that hoped for some rate relief in 2022 got their wish, at least on the truckload side. But they are still paying much, much more on average than they did before the COVID-19 pandemic. And while rates may recede from their peaks in 2021 and early 2022, the rates and pricing structures of the 2010s are as unreachable as Atlantis, buried beneath an ocean of higher operating costs and consumer price inflation. Truckers will cite a litany of higher operating costs in contract negotiations with shippers: equipment, driver and employee wages, fuel, parts and maintenance, property, insurance, and of course purchased transportation costs. The last category underscores how much more interdependent trucking companies and transportation firms in other modes have become during the disruption caused by the COVID-19 pandemic. The next few years promise a new world — whether brave or just strange — as shippers seek new routes to lower trucking and supply chain costs. Truck driver wages, once low enough to compensate for higher costs elsewhere in the supply chain, have risen and are not about to be rolled back, as truckload and LTL carriers continue to battle each other and other industries for the same pool of workers. Join or die It’s clichéd to say that collaboration is the key to navigating the freight lanes ahead, but it’s also true. Shippers looking for transactional vengeance against carriers for the rapid rise in rates last year will find themselves on the losing side of a zero-sum game when the trucking market turns and those rates begin to rise again, whether that happens later this year or in 2023 or 2024. Click to enlarge . The JOC all-in average shipper-paid spot rate fell 16 percent from January to $2.84 per mile in July, on a weighted basis. That average includes fuel surcharges and is the full amount shippers pay, based on an analysis of data from Cargo Chief, DAT Freight & Analytics, and digital freight broker Loadsmart and surveys of shippers and third-party logistics providers. The declining average rate, based on data from more than 4,000 lanes greater than 250 miles, stabilized in July, dropping only $0.02 per mile from June, a sign the spot market is finding a floor. As August got underway, overall trucking demand remained relatively strong, despite the softening truckload spot market. That’s in part because shippers stepped away from the overheated spot market in early 2022, signing contracts that included higher rates for guaranteed capacity in what promised to be a volatile third year of COVID-19 pandemic, shifting freight to the contract truckload market. That’s an example of how trucking’s cycles don’t spin on their own. The length and severity of trucking downturns are dependent on external factors, including the health of US consumer spending, industrial production, and global trade, and whether the US economy falls into recession and how long recessions last. The 2020 recession was the shortest on record at just two months. And according to Harris Rainbow, chief revenue officer at Transportation Insight Holding Co. and Nolan Transportation Group, trucking cycles are turning more quickly. “These pricing cycles are not going to be as elongated as they once were,” Rainbow said in a July interview with JOC.com. “Rather than seeing the market stay down for a full year-and-a-half, in the future that softness may not last as long as it did in past cycles.” That heightened volatility will make collaboration more difficult but also more necessary, he said. “Because of the drastic increase in rates through 2021, a lot of relationships were severed,” Rainbow said. “In this next phase, relationships are going to mean even more. Building those relationships back over the next six months is really important. They’ve been broken across the board.” Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @willbcassidy .

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US trucking demand steady despite steep spot rate correction

<div class="phx-topic abstract-wrapper">The tight supply of warehousing for frontloaded freight is diverting truck shipments as shippers reposition inventory.</div>

The tight supply of warehousing for frontloaded freight is diverting truck shipments as shippers reposition inventory.

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<div class="phx-topic">Rising demand for bonded warehousing amid <a href="https://www.joc.com/article/tariff-related-disruption-spreading-as-us-shippers-pause-plans-5989017">high US tariffs</a> is disrupting the flow of freight by truck to inland US markets, drayage providers say. That and high volumes of freight frontloaded to avoid paying those tariffs are throwing some supply chains and inland distribution networks off-kilter as uncertainty deepens around US trade disputes and the potential for trade deals to lower tariffs. Frontloaded freight, first <a href="http://go.microsoft.com/fwlink/p/?LinkId=255141">from China</a> and now from other US trading partners facing reciprocal tariffs by July, is forcing US shippers to find new storage space for goods, whether bonded facilities, <a href="https://www.joc.com/article/us-importers-turning-to-foreign-trade-zones-amid-tariff-hikes-5999587">free trade zones</a> (FTZs) or any available warehouse. They’re looking for overflow space and a tariff-safe haven for their goods, and that is shifting shipments and inventory across the country, said Paul Brashier, vice president of global supply chain for ITS Logistics, a Reno, Nevada-based drayage and logistics provider. “Bonded storage, especially for Chinese goods, is something we’re seeing tons of demand for right now,” Brashier told the Journal of Commerce Wednesday. Demand is high for bonded trucking as well, in which a carrier moves goods in bond from a port. But bonded warehouses <a href="https://www.joc.com/article/us-importers-turn-to-canadian-bonded-storage-to-delay-payment-of-tariffs-5990113">are hard to find</a>. Shippers that can’t find bonded storage in the US are looking as far away as Canada. That means freight is shifting to new lanes and perhaps new trucking companies. “Let’s say you frontloaded a ton of goods and you get them into the best port you can as quickly as possible,” he said. “They’re not destined for their normal supply chain.” The situation underscores the need for what industrial real-estate developer Prologis calls “flexible inventory positioning in the evolving landscape.” “A disconnected world will require more warehouse space, not less,” Prologis CFO Timothy D. Arndt said during a first-quarter earnings call last month. Discussions between Prologis and more than 300 customers in April found many companies accelerating shipments, Arndt said, adding: “They’re also rerouting volumes and have urgent demand for overflow space.” What those shippers need is short-term flexibility, and they’re turning to third-party logistics providers (3PLs) to find it, he said. “3PLs’ space is getting more utilized, with one prominent name describing that they’ve increased their utilization from 83% to over 90%,” Arndt said. 3PLs are looking for more space for importers, including space at ITS Logistics, which has about 5 million square feet of warehousing at three campuses, Brashier said. “I was approached recently by a 3PL looking to onboard us for additional space,” he said. “Those conversations weren’t happening six months ago, and they are now.” ITS Logistics is also seeing more demand for cross-dock services and direct long-distance trucking or drayage to customers further in the US, skipping intermediate distribution centers. “There’s a lot of stuff moving between distribution centers,” Brashier said, a sign that inventory is being repositioned. Such deviation from “normal” supply chains — especially if it proves long lasting — leads to higher costs for shippers as goods they import move to markets farther from ports. Disruption likely will decline as tariffs take effect and shipments drop. “We’ve got to let everything from the China cut-off process through the system,” Brashier said. <h3>Going with the ‘overflow’ </h3>A Prologis study released this month found that 75% of US real estate demand is tied to regional distribution and local consumer consumption, not global trade. That, in turn, could mean less space available for the overflow of international goods. “Many of our customers source domestically and are relatively unaffected, while others have the capability to adapt or even stand to benefit,” Arndt said. Some Prologis customers are already making decisions, despite uncertainty over US trade policy. “Even in the last two weeks, we signed a lot of leases, and we’ve signed build-to-suits,” Hamid R. Moghadam, Prologis’ chairman and CEO, said during the company’s call. “These customers could have just said, ‘okay, let’s punt on those until we have clarity,’” he said. <h3>Spot market volumes soar </h3>The disruption caused by the diversion of freight is igniting the truckload spot market in terms of volumes. “We’re seeing record numbers of loads moved nationally, surpassing the highest numbers we saw during the pandemic,” Dean Croke, principal analyst at DAT Freight &amp; Analytics, told the Journal of Commerce Thursday. Spot loads moved out of Los Angeles are up 17% from February through May; in the previous two years, the number of loads went down in the same period. Spot loads moved from Los Angeles to Phoenix are up 52% in the February–May period, Croke said. Last week was the busiest week ever for DAT’s spot market load boards, with volumes 6% higher than the week ending Nov. 12, 2021 — the height of the COVID-19 pandemic retail freight surge, he said. In addition, “we’re seeing new lanes pop up because shippers are finding new suppliers,” Croke said. However, even with freight diversions and inventory repositioning, there’s little sign that excess truck capacity is being absorbed by the disruption. “This hasn’t affected spot market rates, which shows there’s enough capacity in the contract and spot markets,” Croke said. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

Rising demand for bonded warehousing amid high US tariffs is disrupting the flow of freight by truck to inland US markets, drayage providers say. That and high volumes of freight frontloaded to avoid paying those tariffs are throwing some supply chains and inland distribution networks off-kilter as uncertainty deepens around US trade disputes and the potential for trade deals to lower tariffs. Frontloaded freight, first from China and now from other US trading partners facing reciprocal tariffs by July, is forcing US shippers to find new storage space for goods, whether bonded facilities, free trade zones (FTZs) or any available warehouse. They’re looking for overflow space and a tariff-safe haven for their goods, and that is shifting shipments and inventory across the country, said Paul Brashier, vice president of global supply chain for ITS Logistics, a Reno, Nevada-based drayage and logistics provider. “Bonded storage, especially for Chinese goods, is something we’re seeing tons of demand for right now,” Brashier told the Journal of Commerce Wednesday. Demand is high for bonded trucking as well, in which a carrier moves goods in bond from a port. But bonded warehouses are hard to find . Shippers that can’t find bonded storage in the US are looking as far away as Canada. That means freight is shifting to new lanes and perhaps new trucking companies. “Let’s say you frontloaded a ton of goods and you get them into the best port you can as quickly as possible,” he said. “They’re not destined for their normal supply chain.” The situation underscores the need for what industrial real-estate developer Prologis calls “flexible inventory positioning in the evolving landscape.” “A disconnected world will require more warehouse space, not less,” Prologis CFO Timothy D. Arndt said during a first-quarter earnings call last month. Discussions between Prologis and more than 300 customers in April found many companies accelerating shipments, Arndt said, adding: “They’re also rerouting volumes and have urgent demand for overflow space.” What those shippers need is short-term flexibility, and they’re turning to third-party logistics providers (3PLs) to find it, he said. “3PLs’ space is getting more utilized, with one prominent name describing that they’ve increased their utilization from 83% to over 90%,” Arndt said. 3PLs are looking for more space for importers, including space at ITS Logistics, which has about 5 million square feet of warehousing at three campuses, Brashier said. “I was approached recently by a 3PL looking to onboard us for additional space,” he said. “Those conversations weren’t happening six months ago, and they are now.” ITS Logistics is also seeing more demand for cross-dock services and direct long-distance trucking or drayage to customers further in the US, skipping intermediate distribution centers. “There’s a lot of stuff moving between distribution centers,” Brashier said, a sign that inventory is being repositioned. Such deviation from “normal” supply chains — especially if it proves long lasting — leads to higher costs for shippers as goods they import move to markets farther from ports. Disruption likely will decline as tariffs take effect and shipments drop. “We’ve got to let everything from the China cut-off process through the system,” Brashier said. Going with the ‘overflow’ A Prologis study released this month found that 75% of US real estate demand is tied to regional distribution and local consumer consumption, not global trade. That, in turn, could mean less space available for the overflow of international goods. “Many of our customers source domestically and are relatively unaffected, while others have the capability to adapt or even stand to benefit,” Arndt said. Some Prologis customers are already making decisions, despite uncertainty over US trade policy. “Even in the last two weeks, we signed a lot of leases, and we’ve signed build-to-suits,” Hamid R. Moghadam, Prologis’ chairman and CEO, said during the company’s call. “These customers could have just said, ‘okay, let’s punt on those until we have clarity,’” he said. Spot market volumes soar The disruption caused by the diversion of freight is igniting the truckload spot market in terms of volumes. “We’re seeing record numbers of loads moved nationally, surpassing the highest numbers we saw during the pandemic,” Dean Croke, principal analyst at DAT Freight & Analytics, told the Journal of Commerce Thursday. Spot loads moved out of Los Angeles are up 17% from February through May; in the previous two years, the number of loads went down in the same period. Spot loads moved from Los Angeles to Phoenix are up 52% in the February–May period, Croke said. Last week was the busiest week ever for DAT’s spot market load boards, with volumes 6% higher than the week ending Nov. 12, 2021 — the height of the COVID-19 pandemic retail freight surge, he said. In addition, “we’re seeing new lanes pop up because shippers are finding new suppliers,” Croke said. However, even with freight diversions and inventory repositioning, there’s little sign that excess truck capacity is being absorbed by the disruption. “This hasn’t affected spot market rates, which shows there’s enough capacity in the contract and spot markets,” Croke said. Contact William B. Cassidy at bill.cassidy@spglobal.com .

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Tariffs amplify US warehousing demand, disrupt inland truck routes

<div class="phx-topic abstract-wrapper">The main heavy-lift components needed for datacenters are cooling infrastructure such as large-scale air conditioners and backup power infrastructure such as batteries, diesel generators and transformers. </div>

The main heavy-lift components needed for datacenters are cooling infrastructure such as large-scale air conditioners and backup power infrastructure such as batteries, diesel generators and transformers.

<div class="phx-topic">The already rapid construction of datacenters in the US is struggling to keep up with the growing needs of artificial intelligence and cloud storage — and now, tariffs are amplifying those hurdles. Capital expenditures by the five largest cloud infrastructure providers increased by almost 60% in the second quarter of 2024 year over year to $55 billion, according to data from S&amp;P Global Market Intelligence, and most of that spending is directed to the building of datacenters that host AI capabilities. Market Intelligence data also shows the datacenter footprint is projected to grow more than 58% — to more than 480 million square feet — between 2024 and 2029. “The datacenter industry has been growing dramatically in the past several years even before the AI explosion two years ago,” said Liu Perkins, S&amp;P Global Market Intelligence’s senior research analyst on datacenter infrastructure. “The cloud datacenters have already been in strong growth. But on top of that, this AI growth has triggered a big change, [positioning] the North American market in the leading position, and now the rest of the world is trying to catch up as well.” S&amp;P Global is the parent company of the Journal of Commerce. Speaking at the Journal of Commerce Breakbulk and Project Cargo Conference in New Orleans last month, Beth Branch, president and CEO of the Port of New Orleans and CEO of the New Orleans Public Belt Railroad, said that datacenters offered a “really massive” opportunity for breakbulk and project cargo over the coming years. She referenced Meta’s construction of a $10 billion AI datacenter in northeast Louisiana — which will be Meta’s largest site globally — as an example of the scale of data projects in the pipeline. Growth has been driven further by government investments and incentivization. “The speed that datacenters are being built has become condensed,” a project cargo shipper told the Journal of Commerce. “The velocity that projects like this can be done in is amazing when there is government money available that can be thrown at them.” Dan Thompson, an S&amp;P Global research analyst with a focus on datacenters, said that the industry is “operating behind the curve” in terms of fulfilling demand, and while companies are aggressively building datacenters, questions remain whether they can truly meet the infrastructure needs for emerging technologies such as AI. <h3>Sourcing hurdles could stunt growth </h3>The demand for datacenters has led to a significant manufacturing backlog, which some analysts say could be impacted by tariffs on Chinese products, thus affecting project timelines and import costs. AI and cloud storage are forcing exponential growth in the datacenter industry, and in an industry where manufacturing is already a significant pain point, tariffs on Chinese-sourced infrastructure components are a taboo topic for many datacenter engineering, procurement and construction companies (EPCs). According to S&amp;P Global Market Intelligence, AI’s growing use of graphic processing units (GPUs) consumes as much as 10 times more energy per chip than traditional central processing units (CPUs). While many of the infrastructure components are subject to manufacturing hurdles, transformer availability continues to pose a critical issue, said Thompson. The datacenter projects — costing about $10 million per megawatt — usually take about 12 to 18 months in the US, with two to three years needed in other countries, he said. While the US tends to get the projects done faster, there are delays — especially on the manufacturing side. As such, many project managers have begun to get ahead of their procurement schedules, opting to head off any growing backlog. “We see a lot of providers, operators, try to secure the supply of key parts and equipment way ahead of time — putting orders in a year or two ahead of their schedule to try and secure the supply,” Perkins said. The main heavy-lift components needed for datacenters are cooling infrastructure — such as large-scale air conditioners — and backup power infrastructure such as batteries, diesel generators and transformers. “A lot of the delays are in getting these large-scale transformers,” said Thompson. “It seems to me that manufacturing can’t keep up. Along with diesel generators — the leads times on those keep getting longer.” Both Perkins and Thompson agreed that tariffs have exacerbated concerns around sourcing, which was already considered a difficult topic before the Trump tariffs were implemented in April. “Suddenly, no one wants to get very precise as to where all of this stuff comes from,” said Thompson. “Most companies have some manufacturing in the United States, but it may just be assembly.” <h3>Destination factors a consideration </h3>Much of the datacenter construction is taking place in rural areas of Ohio, Wyoming, Virginia and Texas. That means things such as the availability of power and roads designed to handle heavy cargo pose significant infrastructure challenges. Much of the equipment is brought in and assembled locally before installation, but large components continue to pose hurdles for the projects. Additionally, beyond the roads, there is a need for terminals designed to handle sufficient pounds per square foot for the heavyweight components being used. While many of the existing datacenters were constructed near hubs and urban areas, there is a growing need to serve more rural areas with lower network connectivity. As such, the development of centers in those areas often presents a catch-22 — depending on existing utility infrastructure but demanding increased output from that same infrastructure. “In addition to the traditional hubs, there’s also emergent places, especially because of the increase of the need,” said Perkins. “That capacity is driving more demand to the utility system, and the utility is not quick enough to catch up to provide the energy required by these datacenters, forcing datacenters to go where energy is available.” There are also the accompanying power centers to construct, needed to supply the vast amounts of energy needed for datacenters and offering another cargo avenue for the heavy-lift industry. “Datacenters do not want to build their own power plants; that’s not their goal. They would much rather take power from the grid,” said Amy Groeschel, principal research analyst, costs and technology, at S&amp;P Global Commodity Insights. “So, the siting of those datacenters will become very key.” And while the growth in datacenter development poses a hurdle for manufacturers, it also offers an opportunity for project cargo vessel operators. “The time on the water is back to the normal situation,” Perkins said. “It was chaos during the pandemic and for a short time post-pandemic, but I think that the shipment part is [back to normal] already. I think the challenge is specifically with manufacturing capability.” Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>.  </div>

The already rapid construction of datacenters in the US is struggling to keep up with the growing needs of artificial intelligence and cloud storage — and now, tariffs are amplifying those hurdles. Capital expenditures by the five largest cloud infrastructure providers increased by almost 60% in the second quarter of 2024 year over year to $55 billion, according to data from S&P Global Market Intelligence, and most of that spending is directed to the building of datacenters that host AI capabilities. Market Intelligence data also shows the datacenter footprint is projected to grow more than 58% — to more than 480 million square feet — between 2024 and 2029. “The datacenter industry has been growing dramatically in the past several years even before the AI explosion two years ago,” said Liu Perkins, S&P Global Market Intelligence’s senior research analyst on datacenter infrastructure. “The cloud datacenters have already been in strong growth. But on top of that, this AI growth has triggered a big change, [positioning] the North American market in the leading position, and now the rest of the world is trying to catch up as well.” S&P Global is the parent company of the Journal of Commerce. Speaking at the Journal of Commerce Breakbulk and Project Cargo Conference in New Orleans last month, Beth Branch, president and CEO of the Port of New Orleans and CEO of the New Orleans Public Belt Railroad, said that datacenters offered a “really massive” opportunity for breakbulk and project cargo over the coming years. She referenced Meta’s construction of a $10 billion AI datacenter in northeast Louisiana — which will be Meta’s largest site globally — as an example of the scale of data projects in the pipeline. Growth has been driven further by government investments and incentivization. “The speed that datacenters are being built has become condensed,” a project cargo shipper told the Journal of Commerce. “The velocity that projects like this can be done in is amazing when there is government money available that can be thrown at them.” Dan Thompson, an S&P Global research analyst with a focus on datacenters, said that the industry is “operating behind the curve” in terms of fulfilling demand, and while companies are aggressively building datacenters, questions remain whether they can truly meet the infrastructure needs for emerging technologies such as AI. Sourcing hurdles could stunt growth The demand for datacenters has led to a significant manufacturing backlog, which some analysts say could be impacted by tariffs on Chinese products, thus affecting project timelines and import costs. AI and cloud storage are forcing exponential growth in the datacenter industry, and in an industry where manufacturing is already a significant pain point, tariffs on Chinese-sourced infrastructure components are a taboo topic for many datacenter engineering, procurement and construction companies (EPCs). According to S&P Global Market Intelligence, AI’s growing use of graphic processing units (GPUs) consumes as much as 10 times more energy per chip than traditional central processing units (CPUs). While many of the infrastructure components are subject to manufacturing hurdles, transformer availability continues to pose a critical issue, said Thompson. The datacenter projects — costing about $10 million per megawatt — usually take about 12 to 18 months in the US, with two to three years needed in other countries, he said. While the US tends to get the projects done faster, there are delays — especially on the manufacturing side. As such, many project managers have begun to get ahead of their procurement schedules, opting to head off any growing backlog. “We see a lot of providers, operators, try to secure the supply of key parts and equipment way ahead of time — putting orders in a year or two ahead of their schedule to try and secure the supply,” Perkins said. The main heavy-lift components needed for datacenters are cooling infrastructure — such as large-scale air conditioners — and backup power infrastructure such as batteries, diesel generators and transformers. “A lot of the delays are in getting these large-scale transformers,” said Thompson. “It seems to me that manufacturing can’t keep up. Along with diesel generators — the leads times on those keep getting longer.” Both Perkins and Thompson agreed that tariffs have exacerbated concerns around sourcing, which was already considered a difficult topic before the Trump tariffs were implemented in April. “Suddenly, no one wants to get very precise as to where all of this stuff comes from,” said Thompson. “Most companies have some manufacturing in the United States, but it may just be assembly.” Destination factors a consideration Much of the datacenter construction is taking place in rural areas of Ohio, Wyoming, Virginia and Texas. That means things such as the availability of power and roads designed to handle heavy cargo pose significant infrastructure challenges. Much of the equipment is brought in and assembled locally before installation, but large components continue to pose hurdles for the projects. Additionally, beyond the roads, there is a need for terminals designed to handle sufficient pounds per square foot for the heavyweight components being used. While many of the existing datacenters were constructed near hubs and urban areas, there is a growing need to serve more rural areas with lower network connectivity. As such, the development of centers in those areas often presents a catch-22 — depending on existing utility infrastructure but demanding increased output from that same infrastructure. “In addition to the traditional hubs, there’s also emergent places, especially because of the increase of the need,” said Perkins. “That capacity is driving more demand to the utility system, and the utility is not quick enough to catch up to provide the energy required by these datacenters, forcing datacenters to go where energy is available.” There are also the accompanying power centers to construct, needed to supply the vast amounts of energy needed for datacenters and offering another cargo avenue for the heavy-lift industry. “Datacenters do not want to build their own power plants; that’s not their goal. They would much rather take power from the grid,” said Amy Groeschel, principal research analyst, costs and technology, at S&P Global Commodity Insights. “So, the siting of those datacenters will become very key.” And while the growth in datacenter development poses a hurdle for manufacturers, it also offers an opportunity for project cargo vessel operators. “The time on the water is back to the normal situation,” Perkins said. “It was chaos during the pandemic and for a short time post-pandemic, but I think that the shipment part is [back to normal] already. I think the challenge is specifically with manufacturing capability.” Contact Laura Robb at laura.robb@spglobal.com . 

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Datacenter growth poses manufacturing hurdle, project carrier opportunity

<div class="phx-topic abstract-wrapper">Importers in the US are rewiring their supply chains and drawing extra inventory from Canada, Mexico and domestically in a “wait and see” response to the trans-Pacific trade war, according to Vincent Clerc.</div>

Importers in the US are rewiring their supply chains and drawing extra inventory from Canada, Mexico and domestically in a “wait and see” response to the trans-Pacific trade war, according to Vincent Clerc.

<div class="phx-topic">US retailers are in a race to find inventory from alternative sources to China, with Maersk CEO Vincent Clerc warning Thursday they may have until summer to fill stocks or risk seeing shortages “across the board.” Volume from China to the US has fallen 30% to 40% since the Trump administration’s imposition of 145% tariffs on most Chinese imports on April 9, Clerc told analysts on the carrier’s first-quarter earnings call. “Everybody is rewiring their supply chains and looking at bringing in extra inventory based on the SKUs [stock keeping units] that they’re most concerned with,” Clerc said, as shippers waited to see whether there would be any easing of tariffs on China. “Right now, the race is about trying to get your hands on as much inventory as possible,” he added. “They’re drawing on the inventories they have in Canada. They’re drawing on inventories they have in Mexico, and on distributors and other vendors inside the US to see how long they can hoard those goods.” Clerc said in the industrials and automotive sectors, and in commodities such as rare earth and semiconductors, the import decline was “going to bite soon.” “There are certain commodities where you can’t substitute imports freely, both in terms of SKUs but also in terms of quantities, because the capacity there was in China is not readily available elsewhere to support the US market,” he said. While empty shelves in big box retailers in the US were not “right around the corner,” Clerc said if inventory could not be found before the summer “it’s going to start to hurt quite a lot across the board.” Maersk is not as exposed as other carriers to the trans-Pacific disruption. The dramatic drop in US imports from China had little effect on its first-quarter result, with China-US trade comprising only 5% of the carrier’s total volume. Maersk reported a strong start to the year with revenue in the first quarter rising 7.8% year over year to $13.3 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) up 70% at $2.7 billion. Earnings before interest and taxes (EBIT) of $1.25 billion were six times higher than the year-ago period, as was a net profit of $1.2 billion. The carrier’s volume in the first quarter grew just 0.1% year over year at 2.9 million FEUs, but it was a decline of 6.5% compared with the last quarter of 2024. Its average rates followed a similar trajectory, rising 2.5% year over year to $2,427 per FEU but down 8.7% quarter over quarter. <h3>Geopolitics drags down global volume forecast </h3>Maersk left its full-year EBIT forecast of zero to $3 billion unchanged. But the increasing macroeconomic and geopolitical uncertainty saw the carrier leave open the possibility of negative growth in global container volumes, revising its forecast to a range between -1% and 4%. Its previous forecast was for 4% market growth in volumes. Clerc explained the reasoning behind the revised volume growth, saying the supply-side risks from new tonnage being delivered combined with a return to Red Sea transits have faded this year. Although significant amounts of capacity were still entering the market, there was little chance of carriers returning to the Red Sea this year despite <a href="https://www.joc.com/article/apparent-houthi-ceasefire-raises-container-shipping-overcapacity-risk-5999930">an apparent ceasefire with the Houthis announced earlier this week</a> by US President Donald Trump. On the demand side, Clerc pointed to the erratic nature of the US tariffs that were creating new levels of uncertainty. “For me, 145% tariffs on China were not really in the base case that we had ... and some of these other tariffs that have been set on pause for 90 days were also higher than what most people expected,” he said. The Trump administration a month ago announced a 90-day pause for countries open to negotiations, leaving a 10% across-the-board baseline tariff in place during the negotiating period. Some positive trade momentum has begun to emerge. The White House announced a trade deal between the US and the UK Thursday, although no details were provided, and representatives from the US and China are set to meet for trade talks in Switzerland this weekend. “If this resolves itself quickly with a lot of trade deals within the 90 days, and maybe a de-escalation with China, you will see the demand side bounce back to somewhere around 4% for the year,” Clerc said. But if the tariffs became entrenched, it would lead to lower global demand and increase the risk of recession in the US, he added. “Because ultimately, given the lack of alternatives to China, both in terms of scale and breadth, this will have to be passed on to consumers,” Clerc said. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

US retailers are in a race to find inventory from alternative sources to China, with Maersk CEO Vincent Clerc warning Thursday they may have until summer to fill stocks or risk seeing shortages “across the board.” Volume from China to the US has fallen 30% to 40% since the Trump administration’s imposition of 145% tariffs on most Chinese imports on April 9, Clerc told analysts on the carrier’s first-quarter earnings call. “Everybody is rewiring their supply chains and looking at bringing in extra inventory based on the SKUs [stock keeping units] that they’re most concerned with,” Clerc said, as shippers waited to see whether there would be any easing of tariffs on China. “Right now, the race is about trying to get your hands on as much inventory as possible,” he added. “They’re drawing on the inventories they have in Canada. They’re drawing on inventories they have in Mexico, and on distributors and other vendors inside the US to see how long they can hoard those goods.” Clerc said in the industrials and automotive sectors, and in commodities such as rare earth and semiconductors, the import decline was “going to bite soon.” “There are certain commodities where you can’t substitute imports freely, both in terms of SKUs but also in terms of quantities, because the capacity there was in China is not readily available elsewhere to support the US market,” he said. While empty shelves in big box retailers in the US were not “right around the corner,” Clerc said if inventory could not be found before the summer “it’s going to start to hurt quite a lot across the board.” Maersk is not as exposed as other carriers to the trans-Pacific disruption. The dramatic drop in US imports from China had little effect on its first-quarter result, with China-US trade comprising only 5% of the carrier’s total volume. Maersk reported a strong start to the year with revenue in the first quarter rising 7.8% year over year to $13.3 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) up 70% at $2.7 billion. Earnings before interest and taxes (EBIT) of $1.25 billion were six times higher than the year-ago period, as was a net profit of $1.2 billion. The carrier’s volume in the first quarter grew just 0.1% year over year at 2.9 million FEUs, but it was a decline of 6.5% compared with the last quarter of 2024. Its average rates followed a similar trajectory, rising 2.5% year over year to $2,427 per FEU but down 8.7% quarter over quarter. Geopolitics drags down global volume forecast Maersk left its full-year EBIT forecast of zero to $3 billion unchanged. But the increasing macroeconomic and geopolitical uncertainty saw the carrier leave open the possibility of negative growth in global container volumes, revising its forecast to a range between -1% and 4%. Its previous forecast was for 4% market growth in volumes. Clerc explained the reasoning behind the revised volume growth, saying the supply-side risks from new tonnage being delivered combined with a return to Red Sea transits have faded this year. Although significant amounts of capacity were still entering the market, there was little chance of carriers returning to the Red Sea this year despite an apparent ceasefire with the Houthis announced earlier this week by US President Donald Trump. On the demand side, Clerc pointed to the erratic nature of the US tariffs that were creating new levels of uncertainty. “For me, 145% tariffs on China were not really in the base case that we had ... and some of these other tariffs that have been set on pause for 90 days were also higher than what most people expected,” he said. The Trump administration a month ago announced a 90-day pause for countries open to negotiations, leaving a 10% across-the-board baseline tariff in place during the negotiating period. Some positive trade momentum has begun to emerge. The White House announced a trade deal between the US and the UK Thursday, although no details were provided, and representatives from the US and China are set to meet for trade talks in Switzerland this weekend. “If this resolves itself quickly with a lot of trade deals within the 90 days, and maybe a de-escalation with China, you will see the demand side bounce back to somewhere around 4% for the year,” Clerc said. But if the tariffs became entrenched, it would lead to lower global demand and increase the risk of recession in the US, he added. “Because ultimately, given the lack of alternatives to China, both in terms of scale and breadth, this will have to be passed on to consumers,” Clerc said. Contact Greg Knowler at greg.knowler@spglobal.com .

Container lines

Trans-Pacific

Container Shipping News

US in race to replenish China stocks to avoid summer shortages: Maersk CEO

<div class="phx-topic abstract-wrapper">Sources anticipate the additional rerouting costs in the region will force other ocean carriers to follow suit on similar surcharges.</div>

Sources anticipate the additional rerouting costs in the region will force other ocean carriers to follow suit on similar surcharges.

<div class="phx-topic">Shippers are beginning to feel the financial pinch of the sudden escalation in military tensions between India and Pakistan in the form of contingency surcharges levied by mainline ocean carriers. The first known levy comes from CMA CGM, which has slapped an “operational recovery surcharge” of $800 per container for Pakistan exports and $300 per box for imports. The extra charges are due to start May 15 on non-US trade lanes and from June 6 for US cargo. “This decision has been necessitated by the recent geopolitical developments in the region, which are significantly impacting our operations,” the French carrier told Pakistani customers. “To ensure that we continue to provide you with the high level of service you expect from us, we have had to adapt and adjust our services accordingly.” Sources anticipate additional rerouting costs in the region will force other carriers to follow suit on similar surcharges. Indian shippers should also expect some “add-on” charges, albeit milder than that of the Pakistan scale, local forwarders believe. The Indian government last week imposed a ban on Pakistan-origin cargo passing through its ports, raising the risk of schedule disruptions for services with twin market coverage in India and Pakistan. Major liners are frantically adjusting schedules and rotations for their Indian networks calling both markets to keep freight moving, with Hapag-Lloyd choosing Salalah Port in Oman and CMA CGM opting for Abu Dhabi’s Khalifa Port as alternative transshipment hubs to serve Pakistani trades with feeder support. Salalah is already a key intermediate point for Gemini Cooperation services, including Hapag-Lloyd’s India-Europe string (IOS). “We are actively working on evaluating long-term alternative solutions and rerouting measures to minimize the impact on [customer] supply chain,” Hapag-Lloyd said in a customer advisory. CMA CGM has also announced a new feeder loop, known as the PIKEX, with a rotation of Jebel Ali, Khalifa, Karachi, Port Qasim, Colombo, Karachi and Jebel Ali to handle Pakistan cargo relays. “We have undertaken a thorough review of our maritime services to ensure the continued reliability and safety of ... cargo shipments,” CMA CGM said. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

Shippers are beginning to feel the financial pinch of the sudden escalation in military tensions between India and Pakistan in the form of contingency surcharges levied by mainline ocean carriers. The first known levy comes from CMA CGM, which has slapped an “operational recovery surcharge” of $800 per container for Pakistan exports and $300 per box for imports. The extra charges are due to start May 15 on non-US trade lanes and from June 6 for US cargo. “This decision has been necessitated by the recent geopolitical developments in the region, which are significantly impacting our operations,” the French carrier told Pakistani customers. “To ensure that we continue to provide you with the high level of service you expect from us, we have had to adapt and adjust our services accordingly.” Sources anticipate additional rerouting costs in the region will force other carriers to follow suit on similar surcharges. Indian shippers should also expect some “add-on” charges, albeit milder than that of the Pakistan scale, local forwarders believe. The Indian government last week imposed a ban on Pakistan-origin cargo passing through its ports, raising the risk of schedule disruptions for services with twin market coverage in India and Pakistan. Major liners are frantically adjusting schedules and rotations for their Indian networks calling both markets to keep freight moving, with Hapag-Lloyd choosing Salalah Port in Oman and CMA CGM opting for Abu Dhabi’s Khalifa Port as alternative transshipment hubs to serve Pakistani trades with feeder support. Salalah is already a key intermediate point for Gemini Cooperation services, including Hapag-Lloyd’s India-Europe string (IOS). “We are actively working on evaluating long-term alternative solutions and rerouting measures to minimize the impact on [customer] supply chain,” Hapag-Lloyd said in a customer advisory. CMA CGM has also announced a new feeder loop, known as the PIKEX, with a rotation of Jebel Ali, Khalifa, Karachi, Port Qasim, Colombo, Karachi and Jebel Ali to handle Pakistan cargo relays. “We have undertaken a thorough review of our maritime services to ensure the continued reliability and safety of ... cargo shipments,” CMA CGM said. Contact Bency Mathew at bencyvmathew@gmail.com .

Port News

Asia-Europe

CMA CGM levies emergency surcharges on Pakistani trade amid India tensions

<div class="phx-topic abstract-wrapper">The world’s largest shipping company said Wednesday the service suspensions and network changes were “in response to the recent changes in demand for cargo transport from Asia to the US.”</div>

The world’s largest shipping company said Wednesday the service suspensions and network changes were “in response to the recent changes in demand for cargo transport from Asia to the US.”

<div class="phx-topic">Mediterranean Shipping Co. has halted two services from China to the US and revamped other container services to the East and Gulf coasts as the Trump administration’s tariffs against Beijing continue to weaken freight demand. The world’s largest shipping company said in an advisory Wednesday the service suspensions and network changes were “in response to the recent changes in demand for cargo transport from Asia to the US.” Following the Trump administration’s imposition of 145% tariffs on most Chinese imports, ocean carriers reported seeing container volumes drop by one-third. Hapag-Lloyd and US-based Matson both said volumes out of China dropped 30% after April 9 when the new China tariffs went into effect. The affected MSC services are all part of <a href="https://www.joc.com/article/network-realignment-shines-light-on-hub-focused-product-vs-direct-calls-5783930">the carrier’s 2025 network following the dissolution of the 2M Alliance with Maersk</a>. In place of Maersk, <a href="https://www.joc.com/article/zim-msc-ink-cooperation-deal-on-services-linking-asia-europe-and-med-5223119">Zim Integrated Shipping Services has signed on to share vessel space and charter slots</a> on some of MSC’s Asia-US routes. The suspensions include the Empire service, which calls three of China’s largest ports and the East Coast ports of New York and New Jersey, Norfolk and Baltimore. The service provided 11,500 TEUs in weekly capacity, according to a report from Hong Kong-based logistics provider Honour Lane Shipping.MSC will also suspend the Pelican service from the Chinese ports of Xiamen and Yantian, along with Vietnam’s Vung Tau and South Korea’s Busan, and calling the Gulf Coast ports of Houston, Mobile and Tampa. Honour Lane said the Pelican service provides weekly capacity ranging between 6,500 and 8,500 TEUs. <h3>Boost SE Asia coverage</h3>The two service suspensions coincide with other interim changes by MSC taking effect this week on four other services that will increase port coverage of Southeast Asia and fill in coverage gaps. The America service from Asia to the US East Coast will stop calling China’s Yantian port, MSC said, while adding a westbound call at Vietnam’s Haiphong port and an eastbound call at the Port of Colombo in Sri Lanka. The service will also add East Coast calls at the ports of Savannah and Jacksonville, while dropping a call to Norfolk. The Amberjack service from China to the US Southeast will drop a call at China’s Nansha port but keep calling other major Chinese ports. Likewise, the Amberjack’s US rotation will now make its first two calls at the ports of New York-New Jersey and Baltimore and drop service to the Port of Wilmington, North Carolina. MSC’s Emerald service will add an outbound call at Taiwan’s Kaohsiung port. The service’s US leg will stop calling Jacksonville and Baltimore but add calls to Norfolk and Boston. The Lone Star service from Asia to the Gulf Coast will add a call at China’s Yantian port, along with adding calls to Singapore and Vung Tau. The service’s US rotation will drop a call at the Port of New Orleans. The MSC suspensions, among the first big ones to hit the East and Gulf coasts, follow similar steps for West Coast services that are also heavily exposed to Chinese freight. Alphaliner reported Tuesday that MSC also suspended its Orient service to Long Beach, while OOCL suspended its Pacific South China Express service to Long Beach.Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Mediterranean Shipping Co. has halted two services from China to the US and revamped other container services to the East and Gulf coasts as the Trump administration’s tariffs against Beijing continue to weaken freight demand. The world’s largest shipping company said in an advisory Wednesday the service suspensions and network changes were “in response to the recent changes in demand for cargo transport from Asia to the US.” Following the Trump administration’s imposition of 145% tariffs on most Chinese imports, ocean carriers reported seeing container volumes drop by one-third. Hapag-Lloyd and US-based Matson both said volumes out of China dropped 30% after April 9 when the new China tariffs went into effect. The affected MSC services are all part of the carrier’s 2025 network following the dissolution of the 2M Alliance with Maersk . In place of Maersk, Zim Integrated Shipping Services has signed on to share vessel space and charter slots on some of MSC’s Asia-US routes. The suspensions include the Empire service, which calls three of China’s largest ports and the East Coast ports of New York and New Jersey, Norfolk and Baltimore. The service provided 11,500 TEUs in weekly capacity, according to a report from Hong Kong-based logistics provider Honour Lane Shipping. MSC will also suspend the Pelican service from the Chinese ports of Xiamen and Yantian, along with Vietnam’s Vung Tau and South Korea’s Busan, and calling the Gulf Coast ports of Houston, Mobile and Tampa. Honour Lane said the Pelican service provides weekly capacity ranging between 6,500 and 8,500 TEUs. Boost SE Asia coverage The two service suspensions coincide with other interim changes by MSC taking effect this week on four other services that will increase port coverage of Southeast Asia and fill in coverage gaps. The America service from Asia to the US East Coast will stop calling China’s Yantian port, MSC said, while adding a westbound call at Vietnam’s Haiphong port and an eastbound call at the Port of Colombo in Sri Lanka. The service will also add East Coast calls at the ports of Savannah and Jacksonville, while dropping a call to Norfolk. The Amberjack service from China to the US Southeast will drop a call at China’s Nansha port but keep calling other major Chinese ports. Likewise, the Amberjack’s US rotation will now make its first two calls at the ports of New York-New Jersey and Baltimore and drop service to the Port of Wilmington, North Carolina. MSC’s Emerald service will add an outbound call at Taiwan’s Kaohsiung port. The service’s US leg will stop calling Jacksonville and Baltimore but add calls to Norfolk and Boston. The Lone Star service from Asia to the Gulf Coast will add a call at China’s Yantian port, along with adding calls to Singapore and Vung Tau. The service’s US rotation will drop a call at the Port of New Orleans. The MSC suspensions, among the first big ones to hit the East and Gulf coasts, follow similar steps for West Coast services that are also heavily exposed to Chinese freight. Alphaliner reported Tuesday that MSC also suspended its Orient service to Long Beach, while OOCL suspended its Pacific South China Express service to Long Beach. Contact Michael Angell at michael.angell@spglobal.com .

North American ports

MSC suspends two US services, rejigs others as tariffs hit Chinese imports

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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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