<div class="phx-topic abstract-wrapper">Oil and gas exploration and development in Australia is expected to grow now that the government has</div>

Oil and gas exploration and development in Australia is expected to grow now that the government has

<div>Oil and gas exploration and development in Australia is expected to grow now that the government has removed all restrictions on foreign investment in oil and gas.The government acted in the face of declining exploration activities, the limited supply of local investment capital and the dwindling known reserves.Kevin Gosper, chairman and chief executive officer of Shell Australia, a unit of Royal Dutch/Shell, said the policy change would greatly encourage international investment in the petroleum industry.He said the government's action recognized the role that international companies had played in developing Australia's petroleum industry and also their long-term commitment.He welcomed the move...

Oil and gas exploration and development in Australia is expected to grow now that the government has removed all restrictions on foreign investment in oil and gas. The government acted in the face of declining exploration activities, the limited supply of local investment capital and the dwindling known reserves.Kevin Gosper, chairman and chief executive officer of Shell Australia, a unit of Royal Dutch/Shell, said the policy change would greatly encourage international investment in the petroleum industry. He said the government's action recognized the role that international companies had played in developing Australia's petroleum industry and also their long-term commitment. He welcomed the move as both sensible and timely, but also called on the government to provide incentives for oil exploration and development. Prior to the latest rule changes, all oil and gas projects costing more than the equivalent of US$7.1 million had to have at least 50 percent Australian equity participation. This requirement has been abolished. All projects, regardless of the amount of foreign participation, even 100 percent, are now automatically approved unless they are considered to be prejudicial to Australia's national interest. Australian Treasurer Paul Keating said the government's resources tax and royalty measures, together with excise arrangements provided a fair system for ensuring that the whole Australian community can share in the returns from our oil and gas wealth. A specific minimum level of Australian participation is accordingly no longer necessary to ensure adequate returns to Australia in the oil and gas industries, he said. The government has therefore taken this opportunity to remove a redundant restriction in this area of the economy, he said. Industry observers here believe offshore exploration and development is the area which will benefit the most from the expanded foreign investment opportunity. These are the most costly projects. Raising capital to finance them within Australia has always been difficult. A spokesman for the Australian Petroleum Exploration Association described the government's move as positive. There is a significant oil supply gap developing, and we need to encourage the industry actively if we are to maintain a reasonable level of self- sufficiency, the spokesman said. Esso Australia Ltd., a unit of Exxon Corp., and the country's largest oil explorer and producer, recently estimated that Australia's oil self- sufficiency would fall from 100 percent in 1985 to 25 percent by 2000 if no new discoveries were made. Esso's research indicated that there was a possibility that new discoveries could increase Australia's oil self-sufficiency to 47 percent in 2000. A spokesman for Australia's BHP Petroleum commented: The government's move is a great step forward.

AUSTRALIA EASES RESTRICTIONS ON INVESTMENT

<div class="phx-topic abstract-wrapper">Prices have more than doubled since the war started, and with fuel comprising almost 30% of operating expenses, the Hong Kong-based carrier has been forced to reduce capacity.</div>

Prices have more than doubled since the war started, and with fuel comprising almost 30% of operating expenses, the Hong Kong-based carrier has been forced to reduce capacity.

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<div class="phx-topic">Cathay Pacific became the latest carrier to announce flight cuts and hikes in fuel surcharges in response to sky-high jet fuel prices that threaten to erase profitability on some routes. The Hong Kong-based airline, one of the world’s largest cargo carriers, will reduce capacity by at least 2% from mid-May to the end of June, joining United Airlines, Air India, Air New Zealand, Delta Airlines, and Vietnam Airways in trimming services to reduce fuel costs that typically comprises almost 30% of an airline’s operating cost. The price of jet fuel has surged since the Middle East war began on Feb. 28. According to the International Air Transport Association (IATA), the average jet fuel price in Asia and Oceania in the week ended April 10 was $217.34 per barrel (p/b), increasing from $99.40 p/b in the week ended Feb. 27. “In the past month, we have pursued every suitable means to keep our flights operating as normal...this includes adjusting the fuel surcharges in an attempt to mitigate the surge in jet fuel prices,” Cathay Pacific said in a statement Saturday. “Despite our best efforts, the measures we have taken to mitigate the heightened fuel costs have not been enough.” The Cathay Pacific cuts will involve regional flights and some to Australia, South Asia and South Africa. The carrier has also extended the suspension of flights to Dubai and Riyadh until June 30 “in view of the ongoing situation in the Middle East.” Asia sources most of its jet fuel supply from the Persian Gulf and airports in the region have been particularly hard hit by the closure of the Strait of Hormuz. Supply shortages have caused Vietnam Airlines to cancel 20% of its flights, while Korean Air said it has tightened internal cost-cutting measures and moved into “emergency management mode.” <h3>Fuel surcharges shoot higher </h3>Cost pressures on airlines are being amplified by sharp increases in pricing components across specific routes, according to consultancy Drewry. Fuel surcharges from Singapore to London jumped by as much as 290% in March compared to the previous month, while security surcharges rose 44% month over month on shipments from Dubai and Abu Dhabi to Amsterdam. A similar trend is emerging on India-Europe routes, where March all-in rates from Mumbai and Delhi to Madrid rose by an average of 27% in March, with a 21% surge in fuel surcharges. “The air freight market has been dealt a two-fold blow of reduced effective available capacity and increased fuel costs,” said Philip Damas, head of Drewry’s logistics practice. “About one-half of the international airfreight routes monitored by Drewry have witnessed a month-over-month price increase of 20% or greater in March 2026.” Around 30% of Asia-Europe air cargo was typically routed through Middle East hubs before the war began, mostly via Dubai and Abu Dhabi in the UAE and Doha in Qatar. Carriers based in those airports are among the world’s largest air freight operators – Qatar Airways is the world’s number three air cargo carrier, Emirates Skycargo is fourth, and Etihad is number 17. A significant volume of air freight also flows through Bahrain and Kuwait. Frederic Horst, managing director of Sydney-based Trade and Transport Group, said Kuwait and Bahrain would usually see around 300 and 240 flights a day, respectively, but in the last month the average has been two a day. “Overall, the main Gulf-facing airports are handling about 32% to 35% of their usual flights,” he said. “UAE airports are higher at about 34% to 38% and flight activity is primarily driven by home-base carriers.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Cathay Pacific became the latest carrier to announce flight cuts and hikes in fuel surcharges in response to sky-high jet fuel prices that threaten to erase profitability on some routes. The Hong Kong-based airline, one of the world’s largest cargo carriers, will reduce capacity by at least 2% from mid-May to the end of June, joining United Airlines, Air India, Air New Zealand, Delta Airlines, and Vietnam Airways in trimming services to reduce fuel costs that typically comprises almost 30% of an airline’s operating cost. The price of jet fuel has surged since the Middle East war began on Feb. 28. According to the International Air Transport Association (IATA), the average jet fuel price in Asia and Oceania in the week ended April 10 was $217.34 per barrel (p/b), increasing from $99.40 p/b in the week ended Feb. 27. “In the past month, we have pursued every suitable means to keep our flights operating as normal...this includes adjusting the fuel surcharges in an attempt to mitigate the surge in jet fuel prices,” Cathay Pacific said in a statement Saturday. “Despite our best efforts, the measures we have taken to mitigate the heightened fuel costs have not been enough.” The Cathay Pacific cuts will involve regional flights and some to Australia, South Asia and South Africa. The carrier has also extended the suspension of flights to Dubai and Riyadh until June 30 “in view of the ongoing situation in the Middle East.” Asia sources most of its jet fuel supply from the Persian Gulf and airports in the region have been particularly hard hit by the closure of the Strait of Hormuz. Supply shortages have caused Vietnam Airlines to cancel 20% of its flights, while Korean Air said it has tightened internal cost-cutting measures and moved into “emergency management mode.” Fuel surcharges shoot higher Cost pressures on airlines are being amplified by sharp increases in pricing components across specific routes, according to consultancy Drewry. Fuel surcharges from Singapore to London jumped by as much as 290% in March compared to the previous month, while security surcharges rose 44% month over month on shipments from Dubai and Abu Dhabi to Amsterdam. A similar trend is emerging on India-Europe routes, where March all-in rates from Mumbai and Delhi to Madrid rose by an average of 27% in March, with a 21% surge in fuel surcharges. “The air freight market has been dealt a two-fold blow of reduced effective available capacity and increased fuel costs,” said Philip Damas, head of Drewry’s logistics practice. “About one-half of the international airfreight routes monitored by Drewry have witnessed a month-over-month price increase of 20% or greater in March 2026.” Around 30% of Asia-Europe air cargo was typically routed through Middle East hubs before the war began, mostly via Dubai and Abu Dhabi in the UAE and Doha in Qatar. Carriers based in those airports are among the world’s largest air freight operators – Qatar Airways is the world’s number three air cargo carrier, Emirates Skycargo is fourth, and Etihad is number 17. A significant volume of air freight also flows through Bahrain and Kuwait. Frederic Horst, managing director of Sydney-based Trade and Transport Group, said Kuwait and Bahrain would usually see around 300 and 240 flights a day, respectively, but in the last month the average has been two a day. “Overall, the main Gulf-facing airports are handling about 32% to 35% of their usual flights,” he said. “UAE airports are higher at about 34% to 38% and flight activity is primarily driven by home-base carriers.” Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo Carriers News

Air Cargo

Cathay Pacific cuts flights as soaring jet fuel prices hit operating costs

<div class="phx-topic abstract-wrapper">The railroads say they plan to file an updated merger application on April 30, addressing many of the complaints that caused regulators to deem their original application “incomplete.”</div>

The railroads say they plan to file an updated merger application on April 30, addressing many of the complaints that caused regulators to deem their original application “incomplete.”

<div class="phx-topic">Newport, Rhode Island — Union Pacific Railroad (UP) and Norfolk Southern Railway (NS) say an updated merger application they plan to file with US regulators on April 30 will include revised forecasts on truck-to-rail conversions, clearer explanations of key proposals, and specific changes aimed at addressing critics of the deal. Executives from the two railroads, speaking Thursday at the North East Association of Rail Shippers (NEARS) Conference, said they’ve received traffic data from competitors BNSF Railway, Canadian National, Canadian Pacific Kansas City and CSX Transportation through a reciprocal discovery process. The data was not included in the original merger application that was <a href="https://www.joc.com/article/stb-rejects-up-ns-merger-application-as-incomplete-6154074">deemed “incomplete” by the US Surface Transportation Board (STB) in mid-January</a>. UP and NS believe the revised filing will convince regulators that combining the rail networks to create the US’ first transcontinental railroad would enhance competition and pull traffic off US highways. “We’ve now gone back, we’ve redone that work with 100% of the carload [volume] files from all the railroads,” Todd Rynaski, UP’s senior vice president of strategy, said at the NEARS event. “All of that work landed us about at the same spot, although [with a] little bit of shift between intermodal and carload [forecasts]. We feel very confident in the initial thesis.” In the original application, UP and NS forecast 2 million overall conversions to rail, including 1.17 million truckload conversions to intermodal. <h3>‘Committed Gateway Pricing’ </h3>Mike McClellan, chief strategy officer for NS, said the updated filing will better explain what the railroads call “Committed Gateway Pricing.” The program would give CSX Transportation and BNSF preset rates for traffic moving over a combined UP-NS network, allowing those railroads to quote a single end-to-end price more quickly to shippers. It would apply only to manifest carload freight, not intermodal. The railroads say the aim is to generate instant rate quotes and make rail more competitive with trucking. “We're going to spend a lot more time, really one-on-one, with the participating railroads and the shippers, especially, to make sure that they fully understand what it is, how it works, and the benefits,” McClellan said at the conference. “That was probably the most misunderstood part of the [original] application.” <h3>Addressing St. Louis </h3>UP and NS also said the revised application will clarify their plans for the Terminal Railroad Association (TRRA) of St. Louis, the switching railroad jointly owned by five of the six North American Class I railroads that helps move freight through the city. Instead of each railroad managing its own traffic in St. Louis, the TRRA receives railcars and then organizes trains to cross the Mississippi River and handoff to other Class I railroads. The arrangement is intended to keep traffic flowing safely and in an orderly fashion through a major interchange location. Under the proposed transaction, Union Pacific would inherit Norfolk Southern’s stake and gain a majority of seats on the TRRA board of directors. CSX has argued that Union Pacific could use that position to influence access and pricing across the river. The STB agreed that the issue raised significant enough competitive concerns to classify the TRRA stake proposal as a “major transaction” and that the original application understated the competitive risks in St. Louis. “We do not intend to ever control the TRRA, and we’ve got that outlined explicitly in the revised application,” Rynaski said. <h3>Meridian Speedway solution requires cash </h3>Although the STB declined to <a href="https://www.joc.com/article/stb-declines-to-intervene-on-meridian-speedway-dispute-6187000">intercede in a dispute over the Meridian Speedway</a>, there is a growing understanding that the issue must be resolved for the merger transaction to yield the rewards detailed in the application. The dispute centers around a 300-mile stretch of track between Shreveport, Louisiana, and Meridian, Mississippi, that is critical for UP and NS to connect Southern California to the US Southeast. Canadian Pacific Kansas City (CPKC), which operates the Meridian joint venture with Norfolk Southern, has enforced an 8,500-foot train length limit based on siding capacity, rejecting efforts by UP and NS to run 11,000-foot trains. CPKC owns a majority stake in the joint venture, so it dictates the rules. UP has complained that containers take too long to cross the Meridian Speedway because of the restrictions. The original application, however, envisioned 11,000-foot trains moving between the West Coast and Atlanta, Charlotte and Jacksonville despite CPKC’s current restriction. McClellan described Norfolk Southern’s relationship with CPKC as “wobbly,” but said he expects UP, NS, and CPKC to reach a solution on Meridian, likely by extending several sidings along the route to handle longer trains. “Over time, I’m sure, we’ll have a very constructive conversation with [CPKC] to put money in the ground to make these issues go away,” he said. Contact Ari Ashe at <a href="ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Newport, Rhode Island — Union Pacific Railroad (UP) and Norfolk Southern Railway (NS) say an updated merger application they plan to file with US regulators on April 30 will include revised forecasts on truck-to-rail conversions, clearer explanations of key proposals, and specific changes aimed at addressing critics of the deal. Executives from the two railroads, speaking Thursday at the North East Association of Rail Shippers (NEARS) Conference, said they’ve received traffic data from competitors BNSF Railway, Canadian National, Canadian Pacific Kansas City and CSX Transportation through a reciprocal discovery process. The data was not included in the original merger application that was deemed “incomplete” by the US Surface Transportation Board (STB) in mid-January . UP and NS believe the revised filing will convince regulators that combining the rail networks to create the US’ first transcontinental railroad would enhance competition and pull traffic off US highways. “We’ve now gone back, we’ve redone that work with 100% of the carload [volume] files from all the railroads,” Todd Rynaski, UP’s senior vice president of strategy, said at the NEARS event. “All of that work landed us about at the same spot, although [with a] little bit of shift between intermodal and carload [forecasts]. We feel very confident in the initial thesis.” In the original application, UP and NS forecast 2 million overall conversions to rail, including 1.17 million truckload conversions to intermodal. ‘Committed Gateway Pricing’ Mike McClellan, chief strategy officer for NS, said the updated filing will better explain what the railroads call “Committed Gateway Pricing.” The program would give CSX Transportation and BNSF preset rates for traffic moving over a combined UP-NS network, allowing those railroads to quote a single end-to-end price more quickly to shippers. It would apply only to manifest carload freight, not intermodal. The railroads say the aim is to generate instant rate quotes and make rail more competitive with trucking. “We're going to spend a lot more time, really one-on-one, with the participating railroads and the shippers, especially, to make sure that they fully understand what it is, how it works, and the benefits,” McClellan said at the conference. “That was probably the most misunderstood part of the [original] application.” Addressing St. Louis UP and NS also said the revised application will clarify their plans for the Terminal Railroad Association (TRRA) of St. Louis, the switching railroad jointly owned by five of the six North American Class I railroads that helps move freight through the city. Instead of each railroad managing its own traffic in St. Louis, the TRRA receives railcars and then organizes trains to cross the Mississippi River and handoff to other Class I railroads. The arrangement is intended to keep traffic flowing safely and in an orderly fashion through a major interchange location. Under the proposed transaction, Union Pacific would inherit Norfolk Southern’s stake and gain a majority of seats on the TRRA board of directors. CSX has argued that Union Pacific could use that position to influence access and pricing across the river. The STB agreed that the issue raised significant enough competitive concerns to classify the TRRA stake proposal as a “major transaction” and that the original application understated the competitive risks in St. Louis. “We do not intend to ever control the TRRA, and we’ve got that outlined explicitly in the revised application,” Rynaski said. Meridian Speedway solution requires cash Although the STB declined to intercede in a dispute over the Meridian Speedway , there is a growing understanding that the issue must be resolved for the merger transaction to yield the rewards detailed in the application. The dispute centers around a 300-mile stretch of track between Shreveport, Louisiana, and Meridian, Mississippi, that is critical for UP and NS to connect Southern California to the US Southeast. Canadian Pacific Kansas City (CPKC), which operates the Meridian joint venture with Norfolk Southern, has enforced an 8,500-foot train length limit based on siding capacity, rejecting efforts by UP and NS to run 11,000-foot trains. CPKC owns a majority stake in the joint venture, so it dictates the rules. UP has complained that containers take too long to cross the Meridian Speedway because of the restrictions. The original application, however, envisioned 11,000-foot trains moving between the West Coast and Atlanta, Charlotte and Jacksonville despite CPKC’s current restriction. McClellan described Norfolk Southern’s relationship with CPKC as “wobbly,” but said he expects UP, NS, and CPKC to reach a solution on Meridian, likely by extending several sidings along the route to handle longer trains. “Over time, I’m sure, we’ll have a very constructive conversation with [CPKC] to put money in the ground to make these issues go away,” he said. Contact Ari Ashe at ari.ashe@spglobal.com .

Rail News

Surface

North-American rail

Intermodal providers

Revised UP-NS merger application will address deficiencies, critics concerns

<div class="phx-topic abstract-wrapper">As if the Strait of Hormuz and Red Sea haven’t caused enough concern for commercial shipping, Lars Jensen warns of the potential for weather-related disruptions once again at the canal by year-end. </div>

As if the Strait of Hormuz and Red Sea haven’t caused enough concern for commercial shipping, Lars Jensen warns of the potential for weather-related disruptions once again at the canal by year-end.

<div class="phx-topic">The entire shipping industry, and most certainly shippers needing to get cargo moved, is yearning for some semblance of stability and predictability to return. If this is the message you are seeking, you should not read further. While all eyes are on the Strait of Hormuz as well as the Red Sea crisis and their inevitable domino effects, it is prudent to look deeper into another potential issue: the Panama Canal. No, not from the geopolitical perspective where Panama is presently squeezed between US and Chinese interests. That is an uncertainty unto itself. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6202588_0.1.jpg"></img></div>The US National Oceanic and Atmospheric Administration (NOAA) issues a monthly outlook for the El Niño/La Niña weather phenomenon. These are shifting weather patterns occurring in the Pacific, and among the many effects driven by the weather pattern is an impact on rainfall in Panama. When we have the El Niño pattern, this can lead to reduced rainfall in Panama, which in turn impacts the water level in Lake Gatun in central Panama. This is the water basin used to operate the locks in the Panama Canal. If the water level drops too far, it leads to restrictions on vessels being able to transit the Panama Canal. The water level in Lake Gatun generally varies between 85 and 88 feet. The latest El Niño was in 2023–24, and it was categorized as “strong.” This led to Lake Gatun water levels dropping to 79.2 feet, which was the third-lowest recorded since 1965, when measurements began. As many might remember from two years ago, this resulted in significant capacity restrictions on shipping through the Panama Canal. We saw a “weak” El Niño in 2018–20. (Note that “weak,” “strong,” etc. are the official designations placed on each El Niño by NOAA depending on intensity). Here we also saw Lake Gatun drop below 80 feet, although for a considerably shorter period than in 2023–24. The one before that was a “very strong” El Niño in 2015–16 that had water levels drop almost to 78 feet, the lowest level ever recorded. There were five “weak” or “moderate” El Niño periods from 1999 to 2015, all with limited impact on the canal water level. Prior to that, 1997–98 was a “very strong” El Niño, leading to water levels dropping to 78.5 feet, the second-lowest ever recorded. The historical data is quite clear. A “strong” or “very strong” El Niño tends to result in a significant decline in Lake Gatun water levels. A weaker El Niño might at times do that, but usually not. <h3>Shippers should begin planning </h3>On Thursday, the outlook from NOAA noted a 61% chance of El Niño emerging this May–July and persisting at least until the end of 2026. NOAA also predicted a 51% chance by year-end that it will be either “strong” or “very strong,” with equal risk between the two. This means that based on the current weather models, there is essentially a 50/50 risk that by the end of the year we will have an El Niño pattern of a magnitude that historically has a high likelihood of significantly reducing the water levels in Lake Gatun. And with this comes the risk of renewed, albeit temporary, capacity restrictions through the canal. Weather and climate forecasts are, by nature, probabilistic, and no one can give a certain prediction. Instead, shippers depending on cargo flows through the Panama Canal might at this time contemplate whether this 50/50 risk should be ignored, be used as a reason for planning contingency measures or be used to look at possible changes to the current supply chain setup. Lars Jensen is CEO and partner at Vespucci Maritime. Contact him at <a href="mailto:lars.jensen@vespucci-maritime.com">lars.jensen@vespucci-maritime.com</a>. </div>

The entire shipping industry, and most certainly shippers needing to get cargo moved, is yearning for some semblance of stability and predictability to return. If this is the message you are seeking, you should not read further. While all eyes are on the Strait of Hormuz as well as the Red Sea crisis and their inevitable domino effects, it is prudent to look deeper into another potential issue: the Panama Canal. No, not from the geopolitical perspective where Panama is presently squeezed between US and Chinese interests. That is an uncertainty unto itself. The US National Oceanic and Atmospheric Administration (NOAA) issues a monthly outlook for the El Niño/La Niña weather phenomenon. These are shifting weather patterns occurring in the Pacific, and among the many effects driven by the weather pattern is an impact on rainfall in Panama. When we have the El Niño pattern, this can lead to reduced rainfall in Panama, which in turn impacts the water level in Lake Gatun in central Panama. This is the water basin used to operate the locks in the Panama Canal. If the water level drops too far, it leads to restrictions on vessels being able to transit the Panama Canal. The water level in Lake Gatun generally varies between 85 and 88 feet. The latest El Niño was in 2023–24, and it was categorized as “strong.” This led to Lake Gatun water levels dropping to 79.2 feet, which was the third-lowest recorded since 1965, when measurements began. As many might remember from two years ago, this resulted in significant capacity restrictions on shipping through the Panama Canal. We saw a “weak” El Niño in 2018–20. (Note that “weak,” “strong,” etc. are the official designations placed on each El Niño by NOAA depending on intensity). Here we also saw Lake Gatun drop below 80 feet, although for a considerably shorter period than in 2023–24. The one before that was a “very strong” El Niño in 2015–16 that had water levels drop almost to 78 feet, the lowest level ever recorded. There were five “weak” or “moderate” El Niño periods from 1999 to 2015, all with limited impact on the canal water level. Prior to that, 1997–98 was a “very strong” El Niño, leading to water levels dropping to 78.5 feet, the second-lowest ever recorded. The historical data is quite clear. A “strong” or “very strong” El Niño tends to result in a significant decline in Lake Gatun water levels. A weaker El Niño might at times do that, but usually not. Shippers should begin planning On Thursday, the outlook from NOAA noted a 61% chance of El Niño emerging this May–July and persisting at least until the end of 2026. NOAA also predicted a 51% chance by year-end that it will be either “strong” or “very strong,” with equal risk between the two. This means that based on the current weather models, there is essentially a 50/50 risk that by the end of the year we will have an El Niño pattern of a magnitude that historically has a high likelihood of significantly reducing the water levels in Lake Gatun. And with this comes the risk of renewed, albeit temporary, capacity restrictions through the canal. Weather and climate forecasts are, by nature, probabilistic, and no one can give a certain prediction. Instead, shippers depending on cargo flows through the Panama Canal might at this time contemplate whether this 50/50 risk should be ignored, be used as a reason for planning contingency measures or be used to look at possible changes to the current supply chain setup. Lars Jensen is CEO and partner at Vespucci Maritime. Contact him at lars.jensen@vespucci-maritime.com .

Trans-Pacific

Maritime

El Niño forecast suggests risk of low water levels along Panama Canal

<div class="phx-topic abstract-wrapper">The start to the year was largely unaffected by the Middle East conflict, but the lagging effect of high bunker fuel prices will be felt from the second quarter onward. </div>

The start to the year was largely unaffected by the Middle East conflict, but the lagging effect of high bunker fuel prices will be felt from the second quarter onward.

<div class="phx-topic">OOCL recorded a 7.6% year-over-year drop in first-quarter revenue amid lower demand on most trades and softening rates. The Cosco subsidiary booked revenue of $2.13 billion in the first three months, with topline sales down across all four main trade lanes as capacity increased 4.3%. The carrier’s total volume rose 1.7% to just under 2 million TEUs, while the overall load factor was 2.1% lower than during the same period in 2025. Trans-Pacific liner revenue at OOCL fell 17% year over year to $744 million, Asia-Europe revenue was down 4.5% at $482 million, trans-Atlantic revenue fell 4.3% to $163 million, while intra-Asia/Australasia revenue rose 0.7% to $748 million. The slight increase in first-quarter volume was largely thanks to the Asia-Europe corridor. The carrier handled 384,893 TEUs on Asia-Europe, up 12% year over year while trans-Pacific volume fell 6% to 523,385 TEUs and trans-Atlantic volume was down 1.3% at 133,910 TEUs. Intra-Asia/Australasia volume increased 3% to 954,464 TEUs. <h3>Lagging impact of high bunker fuel price </h3>While the oversupplied container shipping business appears to be heading for a weak first quarter largely unaffected by disruption from the Middle East war, the industry bill for a sharp increase in bunker prices will be due from the second quarter onward, according to investment bank J.P. Morgan. “The Persian Gulf disruption remains a highly fluid situation and given the time lag in loaded rates, bunker adjustment factors for contracts, and Maersk’s two-month bunker fuel inventory, we see the impact skewed to Q2 2026 onwards,” the bank wrote in a note to Maersk investors Friday. J.P. Morgan is expecting Maersk’s first-quarter earnings out May 7 will also reflect a muted first quarter, given the decline in freight rates through the end of February and the effects of Persian Gulf disruption not really impacting the first quarter. But the investment bank highlighted the impact of high bunker fuel prices that carriers are trying to recover through bunker adjustment factors (BAFs) and emergency fuel surcharges. “We have factored into our 2026 estimates [for Maersk] our assumption that these disruptions will last at least six months, with bunker fuel cost increases post Q2 the biggest drag on earnings that will need to be recovered through firmer spot rates and BAF compliance,” J.P. Morgan said. The bank expects the 2026 bunker fuel bill for Maersk to increase by $1.2 billion to a full-year cost of $7.3 billion on the back of an average price of $693 per ton versus $539 in 2025. “Maersk reportedly has two months of bunker fuel inventory, which shields it from the current volatility,” the bank said. “The bunker fuel adjustment factor for contracts will be recovered in Q3, and therefore there is a lagged fuel cost recovery.” Reflecting this dynamic, J.P. Morgan has forecast that Maersk will report an earnings before interest and taxes loss of $2.6 billion for the year, up from a previous expectation of a $2.8 billion loss. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

OOCL recorded a 7.6% year-over-year drop in first-quarter revenue amid lower demand on most trades and softening rates. The Cosco subsidiary booked revenue of $2.13 billion in the first three months, with topline sales down across all four main trade lanes as capacity increased 4.3%. The carrier’s total volume rose 1.7% to just under 2 million TEUs, while the overall load factor was 2.1% lower than during the same period in 2025. Trans-Pacific liner revenue at OOCL fell 17% year over year to $744 million, Asia-Europe revenue was down 4.5% at $482 million, trans-Atlantic revenue fell 4.3% to $163 million, while intra-Asia/Australasia revenue rose 0.7% to $748 million. The slight increase in first-quarter volume was largely thanks to the Asia-Europe corridor. The carrier handled 384,893 TEUs on Asia-Europe, up 12% year over year while trans-Pacific volume fell 6% to 523,385 TEUs and trans-Atlantic volume was down 1.3% at 133,910 TEUs. Intra-Asia/Australasia volume increased 3% to 954,464 TEUs. Lagging impact of high bunker fuel price While the oversupplied container shipping business appears to be heading for a weak first quarter largely unaffected by disruption from the Middle East war, the industry bill for a sharp increase in bunker prices will be due from the second quarter onward, according to investment bank J.P. Morgan. “The Persian Gulf disruption remains a highly fluid situation and given the time lag in loaded rates, bunker adjustment factors for contracts, and Maersk’s two-month bunker fuel inventory, we see the impact skewed to Q2 2026 onwards,” the bank wrote in a note to Maersk investors Friday. J.P. Morgan is expecting Maersk’s first-quarter earnings out May 7 will also reflect a muted first quarter, given the decline in freight rates through the end of February and the effects of Persian Gulf disruption not really impacting the first quarter. But the investment bank highlighted the impact of high bunker fuel prices that carriers are trying to recover through bunker adjustment factors (BAFs) and emergency fuel surcharges. “We have factored into our 2026 estimates [for Maersk] our assumption that these disruptions will last at least six months, with bunker fuel cost increases post Q2 the biggest drag on earnings that will need to be recovered through firmer spot rates and BAF compliance,” J.P. Morgan said. The bank expects the 2026 bunker fuel bill for Maersk to increase by $1.2 billion to a full-year cost of $7.3 billion on the back of an average price of $693 per ton versus $539 in 2025. “Maersk reportedly has two months of bunker fuel inventory, which shields it from the current volatility,” the bank said. “The bunker fuel adjustment factor for contracts will be recovered in Q3, and therefore there is a lagged fuel cost recovery.” Reflecting this dynamic, J.P. Morgan has forecast that Maersk will report an earnings before interest and taxes loss of $2.6 billion for the year, up from a previous expectation of a $2.8 billion loss. Contact Greg Knowler at greg.knowler@spglobal.com .

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<div class="phx-topic abstract-wrapper">An increasing number of lawmakers at the federal, state, and municipal levels are taking steps to freeze data center development, which serves as an important cargo source. </div>

An increasing number of lawmakers at the federal, state, and municipal levels are taking steps to freeze data center development, which serves as an important cargo source.

<div class="phx-topic">Growing calls to place moratoriums on data center construction across the US present a concern for project cargo specialists who are counting on power generation shipments and other key cargoes required to meet the enormous demands of the mega projects. An increasing number of lawmakers at the federal, state and municipal levels are taking steps to freeze data center development, which serves as an important cargo source. Opponents say the centers drain power supplies, raise energy costs, and can harm the environment. Beyond the physical construction of data centers — the largest of which exceed 4 million square feet in the US and can consume as much energy and water as a small town — the development of these facilities is driving large volumes of cargo for infrastructure projects to support their massive utility needs. Data center construction is already facing setbacks related to tariffs and equipment scarcity. According to an April 1 report by Bloomberg, nearly half of data centers planned for this year in the US are expected to experience delays or cancellations because of a shortage of electrical equipment including transformers, switchgear and batteries to build out the power infrastructure for the centers. The parts primarily come from China, subjecting them to heavy tariffs and taking 24 to 30 months to arrive — up to a year later than data center developers say they need the equipment. For project logistics providers, delays from moratoriums can create significant setbacks for cargo shipments. “Long-lead equipment may already be manufactured or in transit, requiring additional storage, rerouting or resequencing of deliveries,” John Lu, global sector head for semiconductor and cloud construction with DHL Global Forwarding Industrial Projects, told the Journal of Commerce. For large artificial intelligence and data center developments, planning around power, water and sustainability often starts well before projects are publicly announced, Lu said. “Projects of this scale are complex and typically involve multiple layers of local, state and federal approvals,” he said. <h3>Maine set to impose first statewide ban </h3>Legislative efforts to rein in data centers are playing out on all levels of government — some with more support than others. In March, Sen. Bernie Sanders (I-Vermont) and Rep. Alexandria Ocasio-Cortez (D-New York) introduced legislation in the Senate and House, respectively, that they said would enact a “reasonable pause” on the development of new AI data centers in the US “to ensure the safety of humanity.” If the bill becomes law, it would institute “an immediate federal moratorium on AI data centers until strong national safeguards are put in place” to ensure AI is safe and effective, does not increase electricity or utility prices, or harm communities or damage the environment. Although the legislation is unlikely to advance, its introduction follows efforts by more than a dozen states and several cities and counties pushing forward with moratorium proposals. Maine is set to become the first US state to temporarily outlaw the development of most new data centers after a proposed ban received state House approval April 6. The bill advances to the state Senate, which is expected to pass the legislation. The moratorium would freeze construction of any data center consuming at least 20 megawatts of electricity until Nov. 1, 2027. Lawmakers have proposed data center bans or restrictions in 12 other states: Georgia, Maryland, Michigan, Minnesota, New Hampshire, New York, Oklahoma, Pennsylvania, South Carolina, Vermont, and Virginia. On the municipal level, the city of New Orleans in January passed a one-year moratorium on the construction of data centers, and city council members — who unanimously approved the measure — say the ban will likely become permanent. Cities in North Carolina and Wisconsin also approved temporary bans earlier this year, while Dallas and Denver are considering their own restrictions. Global spending on data centers is projected to reach $7 trillion by 2030, according to consultant McKinsey. Of the 4,088 data centers now in the US, Virginia and Texas are the top two states for data center construction, with 579 and 411 facilities, respectively, according to industry website Data Center Map. DHL is in the process of expanding its North American infrastructure to support data center logistics, adding 10 warehouse sites with over 7 million square feet of capacity. The facilities are set go live sometime in 2026, according to DHL. Contact Autumn Cafiero Giusti at <a href="mailto:autumn@autumngiusti.com">autumn@autumngiusti.com</a>. </div>

Growing calls to place moratoriums on data center construction across the US present a concern for project cargo specialists who are counting on power generation shipments and other key cargoes required to meet the enormous demands of the mega projects. An increasing number of lawmakers at the federal, state and municipal levels are taking steps to freeze data center development, which serves as an important cargo source. Opponents say the centers drain power supplies, raise energy costs, and can harm the environment. Beyond the physical construction of data centers — the largest of which exceed 4 million square feet in the US and can consume as much energy and water as a small town — the development of these facilities is driving large volumes of cargo for infrastructure projects to support their massive utility needs. Data center construction is already facing setbacks related to tariffs and equipment scarcity. According to an April 1 report by Bloomberg, nearly half of data centers planned for this year in the US are expected to experience delays or cancellations because of a shortage of electrical equipment including transformers, switchgear and batteries to build out the power infrastructure for the centers. The parts primarily come from China, subjecting them to heavy tariffs and taking 24 to 30 months to arrive — up to a year later than data center developers say they need the equipment. For project logistics providers, delays from moratoriums can create significant setbacks for cargo shipments. “Long-lead equipment may already be manufactured or in transit, requiring additional storage, rerouting or resequencing of deliveries,” John Lu, global sector head for semiconductor and cloud construction with DHL Global Forwarding Industrial Projects, told the Journal of Commerce. For large artificial intelligence and data center developments, planning around power, water and sustainability often starts well before projects are publicly announced, Lu said. “Projects of this scale are complex and typically involve multiple layers of local, state and federal approvals,” he said. Maine set to impose first statewide ban Legislative efforts to rein in data centers are playing out on all levels of government — some with more support than others. In March, Sen. Bernie Sanders (I-Vermont) and Rep. Alexandria Ocasio-Cortez (D-New York) introduced legislation in the Senate and House, respectively, that they said would enact a “reasonable pause” on the development of new AI data centers in the US “to ensure the safety of humanity.” If the bill becomes law, it would institute “an immediate federal moratorium on AI data centers until strong national safeguards are put in place” to ensure AI is safe and effective, does not increase electricity or utility prices, or harm communities or damage the environment. Although the legislation is unlikely to advance, its introduction follows efforts by more than a dozen states and several cities and counties pushing forward with moratorium proposals. Maine is set to become the first US state to temporarily outlaw the development of most new data centers after a proposed ban received state House approval April 6. The bill advances to the state Senate, which is expected to pass the legislation. The moratorium would freeze construction of any data center consuming at least 20 megawatts of electricity until Nov. 1, 2027. Lawmakers have proposed data center bans or restrictions in 12 other states: Georgia, Maryland, Michigan, Minnesota, New Hampshire, New York, Oklahoma, Pennsylvania, South Carolina, Vermont, and Virginia. On the municipal level, the city of New Orleans in January passed a one-year moratorium on the construction of data centers, and city council members — who unanimously approved the measure — say the ban will likely become permanent. Cities in North Carolina and Wisconsin also approved temporary bans earlier this year, while Dallas and Denver are considering their own restrictions. Global spending on data centers is projected to reach $7 trillion by 2030, according to consultant McKinsey. Of the 4,088 data centers now in the US, Virginia and Texas are the top two states for data center construction, with 579 and 411 facilities, respectively, according to industry website Data Center Map. DHL is in the process of expanding its North American infrastructure to support data center logistics, adding 10 warehouse sites with over 7 million square feet of capacity. The facilities are set go live sometime in 2026, according to DHL. Contact Autumn Cafiero Giusti at autumn@autumngiusti.com .

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