<div class="phx-topic abstract-wrapper">Activity at the ports of Los Angeles and Long Beach has a direct impact on the domestic intermodal market, large intermodal providers say, which is why rail volumes were so poor in the first quarter.</div>

Activity at the ports of Los Angeles and Long Beach has a direct impact on the domestic intermodal market, large intermodal providers say, which is why rail volumes were so poor in the first quarter.

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<div>Shippers are moving less freight in 53-foot containers so far this year, and intermodal providers are highlighting a key factor behind the decline in demand: softer volumes into the ports of Los Angeles and Long Beach. Import volumes through the Southern California gateway plunged more than 30% year over year in the first quarter, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. Domestic intermodal providers such as Hub Group and J. B. Hunt Transport Services underscored the importance of import volumes to domestic intermodal during recent earnings calls. J. B. Hunt CEO John Roberts...

Shippers are moving less freight in 53-foot containers so far this year, and intermodal providers are highlighting a key factor behind the decline in demand: softer volumes into the ports of Los Angeles and Long Beach. Import volumes through the Southern California gateway plunged more than 30% year over year in the first quarter, according to PIERS, a sister product of the Journal of Commerce within S&P Global. Domestic intermodal providers such as Hub Group and J. B. Hunt Transport Services underscored the importance of import volumes to domestic intermodal during recent earnings calls. J. B. Hunt CEO John Roberts said the impact of declining imports into Southern California spreads inland. The company reported its transcontinental volume fell 9% year over year in Q1. “International intermodal is down, but so are the imports feeding the warehouses through California, which then create full truckload shipments out of those facilities and our transload model [into 53-foot containers],” Roberts said on a mid-April earnings call. “We need imports to improve. We need a West Coast labor agreement to finalize and give customers confidence in the West Coast for imports more than anything we need in the economy.” Mark Rourke, CEO of Schneider National, said multiple times on an April 27 earnings call that West Coast port volumes are “highly correlated” to its intermodal business. The company did not break out its intermodal results by US region. “We need to see some increased import activity, which is driven by the replenishment cycle,” Rourke said. “The replenishment cycle remains spotty and delayed compared to our original expectation. This dynamic has been especially evident in low import volumes.” Hub Group reported its transcontinental volumes from west to east declined 6% year over year in the first quarter, while local western US volumes fell 12%. “We're anticipating when West Coast port labor challenges are behind us, we'll see the import volume getting back to a more normalized level and that'll be a good driver of growth,” Hub Group CEO Phil Yeager said on an April 27 earnings call. There is some optimism that a West Coast longshore labor deal could be reached soon after local labor and management reached a deal Tuesday on manning requirements for non-automated marine terminals in Los Angeles and Long Beach. But the damage from 12 months of talks and union job actions is undeniable, with shippers diverting a growing share of their discretionary cargo to ports along the East and Gulf coasts to avoid labor disruption on the West Coast. The West Coast’s share of imports from Asia in March was 58.4%, down from 59.9% in March 2022, according to PIERS, and has been under 60% since last June; contract talks began May 10. Dean Croke, a principal analyst of DAT Freight and Analytics, told the Journal of Commerce in March that there is no region with a greater correlation between port activity and domestic freight movement than Los Angeles-Long Beach. What happens in those ports trickles down to truckload and domestic intermodal, so as imports surged at the height of the pandemic disruption between mid-2020 and mid-2022, so too did truckload and intermodal rates and volumes. Now the downturn in port volumes is pulling rates and volumes lower on the domestic front. Domestic intermodal resistant, but not immune to port slowdowns Despite the coastal share shifts of ocean containers to East and Gulf coast ports, the share of domestic intermodal coming from the West Coast hasn’t moved much since the COVID-19 pandemic. In 2020, about 20.1% of domestic intermodal loads originated in the Southwest, defined as Arizona, California or Nevada. The share grew to 21.3% each of the last two years, and was about 21.1% through the first three months of 2023, according to the Intermodal Association of North America (IANA). That lack of movement is because intermodal is not as predominant on the East Coast given that the length of haul is shorter and so trucking rates are more competitive with rail. However, Larry Gross, president and founder of Gross Transportation Consulting and a Journal of Commerce analyst, said that domestic intermodal is less susceptible to the swings in port volume in Los Angeles and Long Beach than international intermodal. Gross said TEU volume declined 24 percent from the third quarter of 2022 to the first quarter of this year in all California ports. He estimated that while international intermodal volume fell 32 percent during that period, cargo transloaded into 53-foot containers slipped just 11 percent. “Transloads into domestic containers are not immune from a decline in port volumes, but it is more resistant than international intermodal,” Gross said. Contact Ari Ashe at ari.ashe@ihsmarkit.com and follow him on Twitter: @arijashe .

North American ports

North-American rail

Weak Southern California port volumes hurting domestic intermodal

<div class="phx-topic abstract-wrapper">The move follows the successful trial transits of the Maersk Sebarok in December and the Maersk Denver, which sailed through the waterway this week.</div>

The move follows the successful trial transits of the Maersk Sebarok in December and the Maersk Denver, which sailed through the waterway this week.

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<div class="phx-topic">Maersk has finalized operational plans to reinstate regular sailings on its India-US East Coast “MECL” network to the traditional — and significantly shorter — Red Sea/Suez Canal route following two uneventful trial passages over the past month, multiple sources told the Journal of Commerce. The normal schedule will take effect with a late January or early February vessel departure out of India. “The MECL is going to go via the Suez on a permanent basis soon,” said a Maersk Middle East executive who did not want to be identified. Officially, the carrier declined to confirm details of the India/Suez plans when contacted by the Journal of Commerce. “We cannot comment on specific vessels’ schedules and potential deviations,” Maersk said. Following the successful transit of the Maersk Sebarok through the Suez and Red Sea in December, the carrier sent the Maersk Denver through the waterway this week; both vessels are part of the MECL service linking India to the US East Coast. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="ae1df54b-4003-46b5-a8c3-e0d35707e941"></dynamic-object></div>Carriers have mostly avoided the Red Sea and Suez Canal since late 2023 when Houthi militants operating in Yemen began their attacks on commercial shipping to protest Israel’s move into Gaza. The weekly MECL features three ports of call out of West India – Mundra, Pipavav and Nhava Sheva. But the Danish liner has declared omissions to Mundra and Pipavav on two upcoming MECL voyages, the Maersk Hartford in Week 3 and the Maersk Chicago in Week 5. Grape cargo bookings for Europe Although Maersk <a href="https://www.joc.com/article/unexpected-margin-boost-in-q3-2025-to-lift-ocean-carriers-full-year-results-drewry-6151976">in a Jan. 12 customer advisory reiterated a “stepwise approach”</a> toward resuming Red Sea/Suez transits, there are other market signals on its firm Suez transit plans. Freight forwarder executives in Mumbai who spoke with the Journal of Commerce said the carrier has begun accepting grape cargo bookings from West India to Europe via the Suez that it is estimated will give shippers a six-day transit gain, on average, relative to the longer Cape of Good Hope passage, which is significant for perishables trades. Maersk will also move Indian grape containers on MECL vessels at Nhava Sheva for transshipment out of Salalah in Oman to Rotterdam, sources said. But Maersk, in a response to a Journal of Commerce query, said it had not started loading Europe cargo from India on the MECL. “We will explore it when the official [routing] changes happen,” the carrier said. The specialized reefer-centric Indian grape export trade has been a high-stakes bet for Maersk, even though it suffered marginal market share setbacks in the last season due to increased competition from Hapag-Lloyd. The Suez offering seems to be a strategic effort to regain lost volumes. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="56199e2b-5df4-468f-a149-b18ae7c32e51"></dynamic-object></div>Meanwhile, all major India-USEC carriers have reported strong cargo lifts in the current week with most vessels overbooked due to tighter capacity stemming from smaller vessel deployments and blank sailings. CMA CGM’s first Suez-based “Indamex” westbound voyage, the CMA CGM Verdi that has an estimated departure of Jan. 17 from Nhava Sheva, has also closed bookings ahead of its declared gate cutoff, according to forwarder sources. Exports from India to the US East Coast have been on a steady decline since the middle of last year amid the tariff spat between Washington and New Delhi. Volumes into the USEC were 67,490 TEUs in November, down from 93,160 TEUs in August, according to data from PIERS, a sister product of the Journal of Commerce within S&amp;P Global. Spot rates on the trade, meanwhile, were pegged at $1,300 per FEU as of Jan. 13 by Platts, a sister company of the Journal of Commerce. That’s down from $1,400 per FEU a month ago. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com.</a></div>

Maersk has finalized operational plans to reinstate regular sailings on its India-US East Coast “MECL” network to the traditional — and significantly shorter — Red Sea/Suez Canal route following two uneventful trial passages over the past month, multiple sources told the Journal of Commerce. The normal schedule will take effect with a late January or early February vessel departure out of India. “The MECL is going to go via the Suez on a permanent basis soon,” said a Maersk Middle East executive who did not want to be identified. Officially, the carrier declined to confirm details of the India/Suez plans when contacted by the Journal of Commerce. “We cannot comment on specific vessels’ schedules and potential deviations,” Maersk said. Following the successful transit of the Maersk Sebarok through the Suez and Red Sea in December, the carrier sent the Maersk Denver through the waterway this week; both vessels are part of the MECL service linking India to the US East Coast. Carriers have mostly avoided the Red Sea and Suez Canal since late 2023 when Houthi militants operating in Yemen began their attacks on commercial shipping to protest Israel’s move into Gaza. The weekly MECL features three ports of call out of West India – Mundra, Pipavav and Nhava Sheva. But the Danish liner has declared omissions to Mundra and Pipavav on two upcoming MECL voyages, the Maersk Hartford in Week 3 and the Maersk Chicago in Week 5. Grape cargo bookings for Europe Although Maersk in a Jan. 12 customer advisory reiterated a “stepwise approach” toward resuming Red Sea/Suez transits, there are other market signals on its firm Suez transit plans. Freight forwarder executives in Mumbai who spoke with the Journal of Commerce said the carrier has begun accepting grape cargo bookings from West India to Europe via the Suez that it is estimated will give shippers a six-day transit gain, on average, relative to the longer Cape of Good Hope passage, which is significant for perishables trades. Maersk will also move Indian grape containers on MECL vessels at Nhava Sheva for transshipment out of Salalah in Oman to Rotterdam, sources said. But Maersk, in a response to a Journal of Commerce query, said it had not started loading Europe cargo from India on the MECL. “We will explore it when the official [routing] changes happen,” the carrier said. The specialized reefer-centric Indian grape export trade has been a high-stakes bet for Maersk, even though it suffered marginal market share setbacks in the last season due to increased competition from Hapag-Lloyd. The Suez offering seems to be a strategic effort to regain lost volumes. Meanwhile, all major India-USEC carriers have reported strong cargo lifts in the current week with most vessels overbooked due to tighter capacity stemming from smaller vessel deployments and blank sailings. CMA CGM’s first Suez-based “Indamex” westbound voyage, the CMA CGM Verdi that has an estimated departure of Jan. 17 from Nhava Sheva, has also closed bookings ahead of its declared gate cutoff, according to forwarder sources. Exports from India to the US East Coast have been on a steady decline since the middle of last year amid the tariff spat between Washington and New Delhi. Volumes into the USEC were 67,490 TEUs in November, down from 93,160 TEUs in August, according to data from PIERS, a sister product of the Journal of Commerce within S&P Global. Spot rates on the trade, meanwhile, were pegged at $1,300 per FEU as of Jan. 13 by Platts, a sister company of the Journal of Commerce. That’s down from $1,400 per FEU a month ago. Contact Bency Mathew at bencyvmathew@gmail.com.

Port News

Container lines

International ports

Container Shipping News

Maritime

Maersk set to resume regular Suez transits on India-USEC 'MECL' loop: sources

<div class="phx-topic abstract-wrapper">Cooperation in the form of steel-wheel interchange has fallen out of fashion as railroads have become less willing to do the necessary work that is intrinsic in the swap of volume on rail, according to Larry Gross.</div>

Cooperation in the form of steel-wheel interchange has fallen out of fashion as railroads have become less willing to do the necessary work that is intrinsic in the swap of volume on rail, according to Larry Gross.

<div class="phx-topic">Since the announcement of the proposed acquisition of Norfolk Southern (NS) by Union Pacific (UP), there has been a strong focus on interline intermodal. Questions are being asked as to what volume might be unlocked by greater connectivity. New interline services are being announced. Merger proponents say that single-line service is the only avenue to capturing more intermodal share. That may be true. But a big reason is that the willingness of railroads to cooperate on interline intermodal has declined over time. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6152070_0.1.jpg"></img></div>Each week, the Association of American Railroads (AAR) publishes two figures for each reporting railroad: the number of intermodal loads originated on that railroad, and the number of intermodal loads received by that railroad in interchange. Typically, the eastern rails receive a greater percentage of their volume in interchange, while the western rails originate a greater percentage. However, the sum of all loads received each week can be compared to the sum of all loads originated to determine the percentage of total intermodal activity that involves more than one railroad. The chart performs such a calculation on the AAR data dating back to 2005. The analysis clearly shows that the percentage of intermodal loads interchanged has undergone a long-term decline. In 2005, the percentage of interchanged loaded units was nearly 22%. Most recently, it has been running in the low 15% range. The percentage of loads interchanged has dropped by one-third. Clearly, cooperation, in the form of steel-wheel interchange, has fallen out of fashion. Railroads have become less willing to do the necessary work that is intrinsic in the interchange of volume on rail. Run-through trains have become scarcer. Why? Surely, precision scheduled railroading, in the form of the laser focus of railroads regarding lowering the operating ratio (OR), has played a role. The railroads have demonstrated an inability to increase volume, and rates are capped by the truck competition. The only way to lower the OR is to take out cost. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="f32c5756-9464-49af-91df-7028b9136c88"></dynamic-object></div>Putting together blocks for steel-wheel interchange requires switching, and therefore, generates costs. However, there is no direct revenue offset to the switching function performed for a connecting carrier. It is an easy decision to eliminate the steel-wheel handoff with its attendant switching costs and rely on a rubber tire transfer at the interchange point. The railroad’s cost is reduced while the revenue is retained. However, that’s not the end of the story. While the individual railroad’s cost is lower, the cost of the door-to-door intermodal move is undoubtedly raised by the inclusion of two additional terminal lifts plus the expensive crosstown dray. Costs are transferred from the railroad to the user. Some moves have been able to withstand this added cost pressure, but other moves have surely gone back to the highway. In recent times, mergers — both completed (CPKC) and announced (UP/NS) — have triggered competitive interline services in response. Examples include the Canadian National/UP/Ferromex Falcon Service between Canada and Mexico, and various recent BNSF/CSX joint services. However, we haven’t yet seen an uptick in the interchange percentage. But supply chains don’t pivot on a dime. Change generally takes time. Perhaps we will soon see the beginning of a grand reversal in this trend, and greater cooperation will become the new standard. Larry Gross is president and founder of Gross Transportation Consulting. Contact him at <a href="mailto:lawrencejgross@gmail.com">lawrencejgross@gmail.com.</a></div>

Since the announcement of the proposed acquisition of Norfolk Southern (NS) by Union Pacific (UP), there has been a strong focus on interline intermodal. Questions are being asked as to what volume might be unlocked by greater connectivity. New interline services are being announced. Merger proponents say that single-line service is the only avenue to capturing more intermodal share. That may be true. But a big reason is that the willingness of railroads to cooperate on interline intermodal has declined over time. Each week, the Association of American Railroads (AAR) publishes two figures for each reporting railroad: the number of intermodal loads originated on that railroad, and the number of intermodal loads received by that railroad in interchange. Typically, the eastern rails receive a greater percentage of their volume in interchange, while the western rails originate a greater percentage. However, the sum of all loads received each week can be compared to the sum of all loads originated to determine the percentage of total intermodal activity that involves more than one railroad. The chart performs such a calculation on the AAR data dating back to 2005. The analysis clearly shows that the percentage of intermodal loads interchanged has undergone a long-term decline. In 2005, the percentage of interchanged loaded units was nearly 22%. Most recently, it has been running in the low 15% range. The percentage of loads interchanged has dropped by one-third. Clearly, cooperation, in the form of steel-wheel interchange, has fallen out of fashion. Railroads have become less willing to do the necessary work that is intrinsic in the interchange of volume on rail. Run-through trains have become scarcer. Why? Surely, precision scheduled railroading, in the form of the laser focus of railroads regarding lowering the operating ratio (OR), has played a role. The railroads have demonstrated an inability to increase volume, and rates are capped by the truck competition. The only way to lower the OR is to take out cost. Putting together blocks for steel-wheel interchange requires switching, and therefore, generates costs. However, there is no direct revenue offset to the switching function performed for a connecting carrier. It is an easy decision to eliminate the steel-wheel handoff with its attendant switching costs and rely on a rubber tire transfer at the interchange point. The railroad’s cost is reduced while the revenue is retained. However, that’s not the end of the story. While the individual railroad’s cost is lower, the cost of the door-to-door intermodal move is undoubtedly raised by the inclusion of two additional terminal lifts plus the expensive crosstown dray. Costs are transferred from the railroad to the user. Some moves have been able to withstand this added cost pressure, but other moves have surely gone back to the highway. In recent times, mergers — both completed (CPKC) and announced (UP/NS) — have triggered competitive interline services in response. Examples include the Canadian National/UP/Ferromex Falcon Service between Canada and Mexico, and various recent BNSF/CSX joint services. However, we haven’t yet seen an uptick in the interchange percentage. But supply chains don’t pivot on a dime. Change generally takes time. Perhaps we will soon see the beginning of a grand reversal in this trend, and greater cooperation will become the new standard. Larry Gross is president and founder of Gross Transportation Consulting. Contact him at lawrencejgross@gmail.com.

Intermodal providers

Surface

Intermodal cooperation on rails has declined amid cost pressures

<div class="phx-topic abstract-wrapper">Technology analyst Gartner’s recent release of a report categorizing 4PL providers signals renewed interest in the concept, even as questions remain about which shippers it is best-suited for.</div>

Technology analyst Gartner’s recent release of a report categorizing 4PL providers signals renewed interest in the concept, even as questions remain about which shippers it is best-suited for.

<div class="phx-topic">A trio of external forces — tariffs, automation and cross-border e-commerce — are bringing demand for the 4PL model in global logistics back to the fore. While the 4PL concept has existed for decades, it has gone through periods of being in and out of fashion, often due to the perception that it is an extraneous layer for shippers wanting to exert more control over their third-party logistics and carrier partners. In December, technology analyst Gartner released its first “4PL Magic Quadrant,” a list of 4PL vendors that grouped players as diverse as shipping line Maersk; 3PL giants DHL, DSV, CH Robinson and Kuehne + Nagel; and asset-light 4PL specialists like 4Flow and Arvato. Resurgent interest in the 4PL model can be largely attributed to the range of disruptive dynamics facing shippers in the almost six years since the pandemic. Those dynamics were heightened by volatile US trade policy over the past year impacting the cost of goods and sourcing decisions via higher tariffs, geopolitical strife and the rise of automation recalibrating what efficiency per shipment means.  “The need for organizations to quickly develop risk-mitigating, resilient and agile logistics networks due to global disruptions is a contributing factor to the growth in demand for 4PLs,” Gartner said in its December report. The 4PL discussion has always been tinged by confusion, in part due to the nonhomogenous nature of companies providing such services, but also because 4PLs are often conflated with terms like managed transportation, lead logistics provider and control towers. Gartner tried to clarify this confusion by specifying that control towers are not the model itself, but rather a tool. “Control towers are often referred to as the ‘engines’ that drive the 4PL solution and are an important operational and data capture tool of a 4PL,” the Gartner report said. “4PLs are leveraging their control towers to increase horizontal supply chain collaboration.” <h3>3PL or 4PL dilemma </h3>The other source of confusion around the model is differentiating between 3PLs providing actual 4PL services and 3PLs providing services that appear to be 4PL services. Eric Rempel, chief innovation officer at Redwood Logistics, said 3PLs are focused on execution, while 4PLs are focused on orchestration. Redwood, cited in the Gartner report, is both a 3PL, through its US freight brokerage, and a 4PL through its platform that focuses on system and partner integration. Felix Kaemmerer, executive vice president at 4Flow, a Germany-based 4PL, said the main justification for 4PL services is a layer of neutrality that enhances risk management for shippers. “Our advice is to separate the transportation, the system and the managed services, to procure them separately so you’re not reliant and avoid that lock-in effect,” he said. “A current 3PL might not be active in that region [a shipper is expanding to], or it might be exposed to subcontracted services. And then there’s a question — maturity. It might be smarter to go with a 3PL and sort out your initial issues in a market and then move to a more neutral 4PL setup.” Kaemmerer, who has spent 15 years at 4Flow, also questioned the idea that 4PL services ever really went out of favor, versus whether the hype around the model goes in and out of fashion. “There’s never been a decline in demand for 4PL services,” he said. “Most companies use the 3PL model, and as they mature, they evaluate whether it makes sense for them to use a 4PL.” In his experience, demand has been constant from verticals like consumer-packaged goods (CPG), whereas now demand is also coming from manufacturing and packaging companies that “10 years ago didn’t know what a 4PL is.” “What’s driving the demand is a change in the manufacturing model,” he said. “Some customers producing maybe in Europe and using a global 3PL, they’re now changing into new regions, and they don’t have the transportation network in [those regions]. In combination with a pressure not to increase [headcount], outsourcing is more appealing.” The second demand driver is access to technology, Kaemmerer said.  “Implementing a [transportation management system] is not rocket science, but it’s also not their specialty,” he said. <h3>Connectivity and coordination </h3>Rempel agreed, saying Redwood has focused on the integration aspect of the 4PL offering to help shippers navigate their complicated tech infrastructure, data needs and connectivity to transportation partners. “It’s managed connectivity,” he said. “A lot of business comes from companies looking to implement a new TMS or global trade product, and most of those fail due to connectivity. It’s like when you’re renovating a house, you redo the plumbing to make it more modular and flexible.” Osi Tagger, CEO of 4PL, emphasized that the need for shippers to enter new markets to support new suppliers or customers is a key driver of business for 4PLs. “If a company wants to grow outside its borders, it needs partners,” she said. “Are they going to partner with a 3PL or 4PL? It depends on whether they expect to grow in one try or region, or they expect global growth. If it’s global, you can go with a global 3PL, but then you’re a small customer for them. Or if do it yourself, you manage it from a distance with a bunch of partners, but it’s not in your toolset to do that.” Tagger said common characteristics for customers are companies growing globally, below $2 billion in revenue and dealing with market uncertainty. Kaemmerer said two broad 4PL models exist in the market: one in which a 4PL provides and operates a TMS as the backbone of its offering, and the other in which the shippers own the TMS and want the 4PL to operate it in an outsourced model. The second model is less attractive to most 4PLs as it is “more easily replaceable and not naturally embedded into other services” the 4PL provides, Kaemmerer said. He said 4PLs have evolved into supply chain orchestration providers, where a shipper needs to bridge the gap between supply chain planning solutions and the “execution layer.” “They have a TMS, a warehouse management system, an order management system, so they have a perfect planning world,” Kaemmerer said. “But when a disruption happens, they struggle to account for that in the execution level.” Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

A trio of external forces — tariffs, automation and cross-border e-commerce — are bringing demand for the 4PL model in global logistics back to the fore.  While the 4PL concept has existed for decades, it has gone through periods of being in and out of fashion, often due to the perception that it is an extraneous layer for shippers wanting to exert more control over their third-party logistics and carrier partners.  In December, technology analyst Gartner released its first “4PL Magic Quadrant,” a list of 4PL vendors that grouped players as diverse as shipping line Maersk; 3PL giants DHL, DSV, CH Robinson and Kuehne + Nagel; and asset-light 4PL specialists like 4Flow and Arvato.  Resurgent interest in the 4PL model can be largely attributed to the range of disruptive dynamics facing shippers in the almost six years since the pandemic. Those dynamics were heightened by volatile US trade policy over the past year impacting the cost of goods and sourcing decisions via higher tariffs, geopolitical strife and the rise of automation recalibrating what efficiency per shipment means.   “The need for organizations to quickly develop risk-mitigating, resilient and agile logistics networks due to global disruptions is a contributing factor to the growth in demand for 4PLs,” Gartner said in its December report.  The 4PL discussion has always been tinged by confusion, in part due to the nonhomogenous nature of companies providing such services, but also because 4PLs are often conflated with terms like managed transportation, lead logistics provider and control towers. Gartner tried to clarify this confusion by specifying that control towers are not the model itself, but rather a tool.  “Control towers are often referred to as the ‘engines’ that drive the 4PL solution and are an important operational and data capture tool of a 4PL,” the Gartner report said. “4PLs are leveraging their control towers to increase horizontal supply chain collaboration.”  3PL or 4PL dilemma  The other source of confusion around the model is differentiating between 3PLs providing actual 4PL services and 3PLs providing services that appear to be 4PL services.  Eric Rempel, chief innovation officer at Redwood Logistics, said 3PLs are focused on execution, while 4PLs are focused on orchestration. Redwood, cited in the Gartner report, is both a 3PL, through its US freight brokerage, and a 4PL through its platform that focuses on system and partner integration.  Felix Kaemmerer, executive vice president at 4Flow, a Germany-based 4PL, said the main justification for 4PL services is a layer of neutrality that enhances risk management for shippers.  “Our advice is to separate the transportation, the system and the managed services, to procure them separately so you’re not reliant and avoid that lock-in effect,” he said. “A current 3PL might not be active in that region [a shipper is expanding to], or it might be exposed to subcontracted services. And then there’s a question — maturity. It might be smarter to go with a 3PL and sort out your initial issues in a market and then move to a more neutral 4PL setup.”  Kaemmerer, who has spent 15 years at 4Flow, also questioned the idea that 4PL services ever really went out of favor, versus whether the hype around the model goes in and out of fashion.  “There’s never been a decline in demand for 4PL services,” he said. “Most companies use the 3PL model, and as they mature, they evaluate whether it makes sense for them to use a 4PL.”  In his experience, demand has been constant from verticals like consumer-packaged goods (CPG), whereas now demand is also coming from manufacturing and packaging companies that “10 years ago didn’t know what a 4PL is.”  “What’s driving the demand is a change in the manufacturing model,” he said. “Some customers producing maybe in Europe and using a global 3PL, they’re now changing into new regions, and they don’t have the transportation network in [those regions]. In combination with a pressure not to increase [headcount], outsourcing is more appealing.”  The second demand driver is access to technology, Kaemmerer said.   “Implementing a [transportation management system] is not rocket science, but it’s also not their specialty,” he said.  Connectivity and coordination  Rempel agreed, saying Redwood has focused on the integration aspect of the 4PL offering to help shippers navigate their complicated tech infrastructure, data needs and connectivity to transportation partners.  “It’s managed connectivity,” he said. “A lot of business comes from companies looking to implement a new TMS or global trade product, and most of those fail due to connectivity. It’s like when you’re renovating a house, you redo the plumbing to make it more modular and flexible.”  Osi Tagger, CEO of 4PL, emphasized that the need for shippers to enter new markets to support new suppliers or customers is a key driver of business for 4PLs.  “If a company wants to grow outside its borders, it needs partners,” she said. “Are they going to partner with a 3PL or 4PL? It depends on whether they expect to grow in one try or region, or they expect global growth. If it’s global, you can go with a global 3PL, but then you’re a small customer for them. Or if do it yourself, you manage it from a distance with a bunch of partners, but it’s not in your toolset to do that.”  Tagger said common characteristics for customers are companies growing globally, below $2 billion in revenue and dealing with market uncertainty.  Kaemmerer said two broad 4PL models exist in the market: one in which a 4PL provides and operates a TMS as the backbone of its offering, and the other in which the shippers own the TMS and want the 4PL to operate it in an outsourced model.  The second model is less attractive to most 4PLs as it is “more easily replaceable and not naturally embedded into other services” the 4PL provides, Kaemmerer said.  He said 4PLs have evolved into supply chain orchestration providers, where a shipper needs to bridge the gap between supply chain planning solutions and the “execution layer.”  “They have a TMS, a warehouse management system, an order management system, so they have a perfect planning world,” Kaemmerer said. “But when a disruption happens, they struggle to account for that in the execution level.”  Contact Eric Johnson at  eric.johnson@spglobal.com . 

Forwarding

Logistics Technology News

4PL model reemerges as disruptive market dynamics buffet shippers

<div class="phx-topic abstract-wrapper">The agreements include the construction of a dozen 18,000-TEU, LNG-powered vessels that are part of the massive $7 billion fleet renewal program the carrier unveiled in early December.</div>

The agreements include the construction of a dozen 18,000-TEU, LNG-powered vessels that are part of the massive $7 billion fleet renewal program the carrier unveiled in early December.

<div class="phx-topic">Cosco Shipping Holdings is further expanding its long-haul and feeder fleets after signing two shipbuilding orders Tuesday totaling almost $2.7 billion for 18 container ships that will be delivered in 2028 and 2029. The larger deal, worth $2.4 billion, was inked with Shanghai-headquartered Jiangnan Shipyard (Group) Co for 12 18,000-TEU liquefied natural gas-powered dual-fuel container ships, Cosco said in a Hong Kong stock exchange filing. Jiangnan Shipyard is a subsidiary of China State Shipbuilding Corporation (CSSC). The contract is the third to be awarded by Cosco Shipping to a CSSC group shipbuilder since parent company China Cosco Shipping Group and CSSC <a href="https://www.joc.com/article/cosco-shipping-inks-7-billion-deal-for-big-fleet-expansion-6131444">signed a $7 billion umbrella agreement in early December</a> for a package of 87 vessels. Two CSSC deals <a href="https://www.joc.com/article/cosco-awards-initial-newbuilding-deals-as-part-of-7-billion-fleet-expansion-6145063">were signed last week</a>. The Jiangnan Shipyard contract is the first to be awarded for LNG-fueled very-large container ships this year and further reinforces LNG as the next-generation fuel of choice for ocean carriers. Some 4.1 million TEUs of LNG-fueled container ships were on order at the end of last year, according to data from Sea-web, a sister company of the Journal of Commerce within S&amp;P Global. That compared with 2.1 million TEUs of methanol-fueled ships on order. The Cosco order also takes the total capacity of very-large container ships on order to more than 1 million TEUs, according to Sea-web data. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e8be4ac1-33cb-4758-93c4-1d0f92f52e7d"></dynamic-object></div>Cosco said Jiangnan Shipyard was chosen because it offered the most favorable terms with a shorter delivery schedule compared with two other shipyards that submitted offers. While the price per vessel was the median of the those submitted by the three builders, “it remains largely comparable to the lowest quotation,” Cosco said in Tuesday’s filing. The carrier said the ships would be deployed on east-west routes and while they would expand the Cosco group fleet, they would also replace older tonnage. <h3>Smaller deal for regional vessels </h3>The second deal Cosco signed Tuesday was for $284 million for six 3,000-TEU conventionally powered container ships that are set to be delivered between June and December 2028. The contract was inked with Cosco shipbuilding subsidiary Cosco Shipping Heavy Industry (Zhoushan) Co. in eastern China. The vessels are separate from the $7 billion shipbuilding pact China Cosco Shipping and CSSC signed in early December. Cosco said the ships will be deployed on international regional feeder routes, providing stable capacity and reducing vessel costs. They will also assist the carrier in "achieving long-term development in emerging, regional and non-China markets," Cosco said. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com.</a></div>

Cosco Shipping Holdings is further expanding its long-haul and feeder fleets after signing two shipbuilding orders Tuesday totaling almost $2.7 billion for 18 container ships that will be delivered in 2028 and 2029. The larger deal, worth $2.4 billion, was inked with Shanghai-headquartered Jiangnan Shipyard (Group) Co for 12 18,000-TEU liquefied natural gas-powered dual-fuel container ships, Cosco said in a Hong Kong stock exchange filing. Jiangnan Shipyard is a subsidiary of China State Shipbuilding Corporation (CSSC). The contract is the third to be awarded by Cosco Shipping to a CSSC group shipbuilder since parent company China Cosco Shipping Group and CSSC signed a $7 billion umbrella agreement in early December for a package of 87 vessels. Two CSSC deals were signed last week . The Jiangnan Shipyard contract is the first to be awarded for LNG-fueled very-large container ships this year and further reinforces LNG as the next-generation fuel of choice for ocean carriers. Some 4.1 million TEUs of LNG-fueled container ships were on order at the end of last year, according to data from Sea-web, a sister company of the Journal of Commerce within S&P Global. That compared with 2.1 million TEUs of methanol-fueled ships on order. The Cosco order also takes the total capacity of very-large container ships on order to more than 1 million TEUs, according to Sea-web data. Cosco said Jiangnan Shipyard was chosen because it offered the most favorable terms with a shorter delivery schedule compared with two other shipyards that submitted offers. While the price per vessel was the median of the those submitted by the three builders, “it remains largely comparable to the lowest quotation,” Cosco said in Tuesday’s filing. The carrier said the ships would be deployed on east-west routes and while they would expand the Cosco group fleet, they would also replace older tonnage. Smaller deal for regional vessels The second deal Cosco signed Tuesday was for $284 million for six 3,000-TEU conventionally powered container ships that are set to be delivered between June and December 2028. The contract was inked with Cosco shipbuilding subsidiary Cosco Shipping Heavy Industry (Zhoushan) Co. in eastern China. The vessels are separate from the $7 billion shipbuilding pact China Cosco Shipping and CSSC signed in early December. Cosco said the ships will be deployed on international regional feeder routes, providing stable capacity and reducing vessel costs. They will also assist the carrier in "achieving long-term development in emerging, regional and non-China markets," Cosco said. Contact Keith Wallis at keithwallis@hotmail.com.

Cosco inks almost $2.7 billion in deals for 18 newbuild container ships

<div class="phx-topic abstract-wrapper">Operating conditions could also turn expected losses in 2026 into profits despite little clarity over the timing of a widespread return to Red Sea transits, according to the consultancy.</div>

Operating conditions could also turn expected losses in 2026 into profits despite little clarity over the timing of a widespread return to Red Sea transits, according to the consultancy.

<div class="phx-topic">Ocean carriers are expected to report better-than-expected full-year 2025 results over the next few weeks due to higher profit margins through the third quarter and slowing fleet growth, according to maritime consultancy Drewry. Although rates softened and volume slowed on the major east-west trade lanes through the fourth quarter, Drewry is also revising its prior loss-making forecast for 2026. The consultancy now expects the industry to turn a profit despite little clarity over the timing of a widespread return to Red Sea transits that would release 8% of global capacity back into an already oversupplied market. Simon Heaney, senior manager for container research at Drewry, said the container shipping sector’s earnings before interest and taxes (EBIT) margins fell to 12.3% in the third quarter of 2025, well below the 34.5% margin recorded in third-quarter 2024 but still a significant rate-supported improvement on the 7.9% margin in the 2025 second quarter. “This was an unexpected change of direction as we had anticipated that margins would shrink further in 3Q 2025,” Heaney told the Journal of Commerce Tuesday.  The “better-than-expected results” has prompted Drewry to upgrade the financial year 2025 profit forecast from $20 billion to $32 billion and raise the outlook for 2026 from a $10 billion loss to a $1 billion profit, he noted. HSBC Global Investment Research highlighted the narrowing supply-demand gap in a market update that pointed to data showing container fleet growth slowing to 4% in 2026 from 7% in 2025, with demand growth this year slowing to 2.5% compared to 4% in 2025. The report said, “... we think the gap is manageable before worsening in 2027 when [vessel] deliveries surge to all-time highs.” “Demand is holding up despite US container imports declining in the past few months and the National Retail Federation expecting weakness until April, albeit milder than previous forecasts,” HSBC noted.  On the Asia-Europe trade, the latest data from Container Trades Statistics (CTS) shows a 15.5% year-over-year increase in volume in November, which HSBC said indicated <a href="https://www.joc.com/article/asia-europe-ocean-carriers-add-capacity-as-trade-enters-peak-shipping-period-6145059">a pre-Lunar New Year peak season rush</a>. Still no clarity over return to Red Sea A return of container shipping to the Red Sea hangs over the 2026 outlook, with the timing of such a return likely to have a material influence on carrier earnings. Analysts remain divided over when a widescale return will happen. Carriers have mostly avoided the Red Sea and Suez Canal since late 2023 when Houthi militants operating in Yemen began their attacks on commercial shipping to protest Israel’s move into Gaza. “We see no immediate resolution to the Red Sea disruptions, which alongside ongoing port congestion in Europe should keep capacity tight and prevent freight rates from capitulating,” HSBC said. J.P. Morgan had a more positive view, noting that a 20% increase in Suez transits in December compared to the previous month has created growing interest around shipping’s return to the far-quicker route. “We expect this to happen post-Lunar New Year on Feb. 17, and we see limited disruption risk of congestion in Europe materially impacting short-term rates should the timing coincide with the seasonal trough,” the investment bank noted. Peter Sand, chief analyst for rate benchmarking platform Xeneta, said it was “highly unlikely” carriers would present extensive guidance on a Red Sea return in their 2026 outlooks. He expected carriers to maintain Cape of Good Hope transits around southern Africa while planning for a gradual shift to the Suez route. Another Maersk vessel transits Suez Following the successful transit of the Maersk Sebarok through the Suez and Red Sea in December, the carrier sent the Maersk Denver through the waterway this week; both vessels are part of the MECL service linking India to the US East Coast. However, in a customer advisory Tuesday, Maersk was quick to reiterate its position that the safety of crew, vessels and cargo remained “of utmost importance,” noting the necessary safety measures were applied during the transit of the Maersk Denver.  “Customers with cargo on this vessel are being informed directly,” the carrier said. “Assuming that security thresholds continue to be met, we will continue our stepwise approach towards gradually resuming navigation along the east-west corridor via the Suez Canal and the Red Sea. There are no additional sailings to announce at this time.”  While the ceasefire between Israel and Hamas that was agreed to in October is holding, rapidly unfolding geopolitical events in the region are again raising red flags, according to Jack Kennedy, head of Middle East and North Africa country risk at S&amp;P Global Market Intelligence. “If Israel gets involved in [new] strikes on Iran, there is a higher likelihood that the Houthi will resume some kind of direct attacks on Israel from Yemen, and that might extend to US shipping with acknowledgment that this increases risk from targeting issues,” Kennedy said. "If the regime in Tehran perceives a genuine existential risk, they will probably try to escalate across the region to create an intervention reassessment from the US,” he added.  S&amp;P Global is the parent company of the Journal of Commerce. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Ocean carriers are expected to report better-than-expected full-year 2025 results over the next few weeks due to higher profit margins through the third quarter and slowing fleet growth, according to maritime consultancy Drewry.  Although rates softened and volume slowed on the major east-west trade lanes through the fourth quarter, Drewry is also revising its prior loss-making forecast for 2026. The consultancy now expects the industry to turn a profit despite little clarity over the timing of a widespread return to Red Sea transits that would release 8% of global capacity back into an already oversupplied market.  Simon Heaney, senior manager for container research at Drewry, said the container shipping sector’s earnings before interest and taxes (EBIT) margins fell to 12.3% in the third quarter of 2025, well below the 34.5% margin recorded in third-quarter 2024 but still a significant rate-supported improvement on the 7.9% margin in the 2025 second quarter.  “This was an unexpected change of direction as we had anticipated that margins would shrink further in 3Q 2025,” Heaney told the Journal of Commerce Tuesday.   The “better-than-expected results” has prompted Drewry to upgrade the financial year 2025 profit forecast from $20 billion to $32 billion and raise the outlook for 2026 from a $10 billion loss to a $1 billion profit, he noted.  HSBC Global Investment Research highlighted the narrowing supply-demand gap in a market update that pointed to data showing container fleet growth slowing to 4% in 2026 from 7% in 2025, with demand growth this year slowing to 2.5% compared to 4% in 2025.  The report said, “... we think the gap is manageable before worsening in 2027 when [vessel] deliveries surge to all-time highs.”  “Demand is holding up despite US container imports declining in the past few months and the National Retail Federation expecting weakness until April, albeit milder than previous forecasts,” HSBC noted.   On the Asia-Europe trade, the latest data from Container Trades Statistics (CTS) shows a 15.5% year-over-year increase in volume in November, which HSBC said indicated  a pre-Lunar New Year peak season rush .  Still no clarity over return to Red Sea  A return of container shipping to the Red Sea hangs over the 2026 outlook, with the timing of such a return likely to have a material influence on carrier earnings. Analysts remain divided over when a widescale return will happen. Carriers have mostly avoided the Red Sea and Suez Canal since late 2023 when Houthi militants operating in Yemen began their attacks on commercial shipping to protest Israel’s move into Gaza.  “We see no immediate resolution to the Red Sea disruptions, which alongside ongoing port congestion in Europe should keep capacity tight and prevent freight rates from capitulating,” HSBC said.  J.P. Morgan had a more positive view, noting that a 20% increase in Suez transits in December compared to the previous month has created growing interest around shipping’s return to the far-quicker route.  “We expect this to happen post-Lunar New Year on Feb. 17, and we see limited disruption risk of congestion in Europe materially impacting short-term rates should the timing coincide with the seasonal trough,” the investment bank noted.  Peter Sand, chief analyst for rate benchmarking platform Xeneta, said it was “highly unlikely” carriers would present extensive guidance on a Red Sea return in their 2026 outlooks. He expected carriers to maintain Cape of Good Hope transits around southern Africa while planning for a gradual shift to the Suez route.  Another Maersk vessel transits Suez  Following the successful transit of the Maersk Sebarok through the Suez and Red Sea in December, the carrier sent the Maersk Denver through the waterway this week; both vessels are part of the MECL service linking India to the US East Coast.  However, in a customer advisory Tuesday, Maersk was quick to reiterate its position that the safety of crew, vessels and cargo remained “of utmost importance,” noting the necessary safety measures were applied during the transit of the Maersk Denver.   “Customers with cargo on this vessel are being informed directly,” the carrier said. “Assuming that security thresholds continue to be met, we will continue our stepwise approach towards gradually resuming navigation along the east-west corridor via the Suez Canal and the Red Sea. There are no additional sailings to announce at this time.”   While the ceasefire between Israel and Hamas that was agreed to in October is holding, rapidly unfolding geopolitical events in the region are again raising red flags, according to Jack Kennedy, head of Middle East and North Africa country risk at S&P Global Market Intelligence.  “If Israel gets involved in [new] strikes on Iran, there is a higher likelihood that the Houthi will resume some kind of direct attacks on Israel from Yemen, and that might extend to US shipping with acknowledgment that this increases risk from targeting issues,” Kennedy said.  "If the regime in Tehran perceives a genuine existential risk, they will probably try to escalate across the region to create an intervention reassessment from the US,” he added.   S&P Global is the parent company of the Journal of Commerce.  Contact Greg Knowler at  greg.knowler@spglobal.com . 

Asia-Europe

‘Unexpected’ margin boost in Q3 2025 to lift ocean carriers’ full-year results – Drewry 

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Maersk set to resume regular Suez transits on India-USEC 'MECL' loop: sources

Intermodal cooperation on rails has declined amid cost pressures

4PL model reemerges as disruptive market dynamics buffet shippers