<div class="phx-topic abstract-wrapper">Module growth and oil and gas investment are signaling improvement for the super-heavy cargo niche, but a surplus of vessel supply is still weighing on the market.</div>

Module growth and oil and gas investment are signaling improvement for the super-heavy cargo niche, but a surplus of vessel supply is still weighing on the market.

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<div>Overcapacity and lackluster charter rates are weighing on the semi-submersible and module carrier market, even as a raft of new projects offers promise of better times in the next two to three years. That comes as the market for semi-submersible and module carriers is increasingly dominated by the transport of modularized cargo, senior shipping executives said.Peter Hansen, president of Cosco Shipping Heavy Transport, told JOC.com that a sustained rebound in oil prices over the last three years — currently averaging $71 a barrel, up from a low of $28 a barrel in January 2016 — “has moderately increased utilization, with...

Overcapacity and lackluster charter rates are weighing on the semi-submersible and module carrier market, even as a raft of new projects offers promise of better times in the next two to three years. That comes as the market for semi-submersible and module carriers is increasingly dominated by the transport of modularized cargo, senior shipping executives said. Peter Hansen, president of Cosco Shipping Heavy Transport, told JOC.com that a sustained rebound in oil prices over the last three years — currently averaging $71 a barrel, up from a low of $28 a barrel in January 2016 — “has moderately increased utilization, with some projects now being sanctioned.” Further outlining the promise that lies ahead thanks to a splurge of projects awaiting the green light, Roberto Frigeni, president and managing director of RollDock USA, said, “The potential is immense to the extent there could be a shortage of ships, especially at the high end for large, sophisticated vessels.” These planned projects are across all sectors but particularly liquefied natural gas (LNG), wind power, and midstream petrochemical plants. “There are many projects in the pipeline that have still to be awarded to carriers. Some are at the final investment decision stage, some are awaiting notice to proceed,” he said. Labor costs, shortages driving modularization Royal Boskalis Westminster, which operates a fleet of 11 semi-submersible vessels mainly acquired from takeovers of carriers Fairstar and Dockwise, said in its 2018 annual report that the near-term market for semi-submersible and module carriers remains under pressure and dependent on the spot charter market, but long-term projects were brighter. “Based on the current tender activity and market, the mid- to long-term prospects for the high-end market look encouraging.” Boskalis sees new opportunities for transporting box-shaped floating production, storage, and offloading vessels. In February, the carrier won a $55 million contract, with options for a further $30 million worth of work, to transport modules from China to North America for an LNG export facility. Boskalis did not disclose details of the project, but said in a statement that the deal “ties up two high-end open-stern heavy transport vessels commencing the second quarter of 2021 through to the third quarter of 2022.” Boskalis vessels include Boka Vanguard, capable of carrying cargoes weighing up to 110,000 metric tons. In 2018, the ship transported a 90,000-metric ton P67 floating production, storage, and offloading (FPSO) unit from Qingdao, China, to Brazil’s Lula-Cernambi oilfield in the Santos basin, being developed by Petrobras. Globally, increasing labor costs and labor shortages on the project owner and engineering, procurement, and construction (EPC) side are driving a trend towards the modularization of cargoes. “We’ve seen an increase in modularization, but it depends on the EPC contractor. The US Gulf is a mix of modularized and loose-item cargoes. In British Columbia, the Canada LNG and Woodfibre LNG projects will be built using prefabricated modules,” said RollDock’s Frigeni. “Remote projects require modularization because of the shortage of skilled labor. But some projects are [stick-built] at site because there is a huge labor requirement and politicians have backed the project because of the promise it will provide labor and employment,” he said. Modularization favors transport via semi-submersible and module carriers because of the ships’ wide-open rear decks. Extremely large modules, some weighing thousands of metric tons, and very large units related to oil and gas construction, can be rolled or floated aboard. Overcapacity weighing heavy For the semi-submersible sector, a surplus of tonnage is still an albatross. “Continuing low freight levels within the spot market can be attributed to an oversupply of vessels,” Hansen said. “At the moment, the worldwide module carrier fleet is only 50-60 percent utilized,” Frigeni said. Looking at the broader multipurpose and heavy-lift (MPV/HL) sector, he said, “In our opinion, we could scrap 30 percent of the heavy-lift and project cargo fleet before rates stabilize and we start to see an increase.” Module carriers and semi-submersibles represent a very small, extremely specialized portion of the heavy transport market, or as Frigeni put it, “It’s a niche inside a niche.” RollDock provides engineering, land transport, and related services, he said. Other key module and semi-submersible carriers include Boskalis, BigLift (which also operates super-heavy lift vessels and is a sister company to multipurpose carrier Spliethoff), and Cosco, which also operates a large MPV/HL fleet. Despite the glut of tonnage, however, further consolidation in the semi-submersible niche is unlikely, carrier executives said. “In our segment, there’s probably not a lot of consolidation left,” Frigeni said. “Zeamarine has been absorbing a lot in the heavy-lift market. Now there are probably four large project cargo carriers: Zeamarine, Cosco, Spliethoff-BigLift Shipping, and BBC Chartering. I don't think they'll merge into two.” More pools and joint ventures are also unlikely, in Frigeni’s opinion, unless driven by specific project requirements. "Joint ventures and pools, most of the time, never work. ... To create a successful pool, partners need to think alike," he said. “We had a joint venture with BigRoll [a partnership between BigLift and Roll Group, parent of RollDock] but that was mainly for the Yamal LNG project in Russia,” Frigeni said. After Yamal ended, the partners separated. On another project, joint EPC contractors Technip and Fluor demanded the module carrier operators work together because they didn't think one carrier could execute the project alone. Against this backdrop, there is little likelihood of semi-submersibles or module carrier newbuildings being ordered, except where necessary for specific projects. Cosco Shipping Heavy Transport, for example, is planning to expand its fleet of semi-submersible ships with a fourth 50,000-dwt heavy load carrier. “We are building one additional X-Class vessel — to join sister ships Xiang He Kou, Xiang Rui Kou, and Xiang Yun Kou — for the upcoming Canada LNG project which requires four vessels of this size,” Hansen said. Details of the newbuilding schedule have yet to be finalized. Plastics, LNG lifting growth prospects Hansen, who is based in Houston, said Cosco expects an increase in LNG developments worldwide partly due to increased demand from China, “which leads to an increase in potential onshore module based projects.” Among major projects awaiting the go-ahead are the $18 billion Rio Grande LNG export facility near Brownsville, Texas, the $30 billion Driftwood project on the Calcasieu River in Louisiana, and Anadarko Petroleum’s $20 billion LNG scheme in Mozambique. “We do not see the offshore market rebounding completely, but onshore module transports are increasing,” he said. “There are also some potential opportunities in the wind farm and decommissioning markets.” Cosco Shipping Heavy Transport has carved out a niche after pioneering the dynamic positioning (DP) float-over method to transport and install topsides — the upper section of an offshore oil platform. In October, Cosco’s DP2 vessel, Xiang He Kou, installed the 18,000-metric ton BorWin Gamma topside, the first topside module to be installed in the North Sea using the method. Cosco ships also installed three topsides using the DP float-over technique last August and September as part of the Nasr Full Field Development Package-2 project in the United Arab Emirates, and Cosco semi-submersible Tai An Kou carried out two DP float-over installations in the Middle East in late 2018. “We can’t speak for the others, but we have a good utilization rate for our fleet,” Hansen said. Even so, volatile oil prices are still casting a shadow over the market. “In the US, we are still talking about projects we were talking about six or seven years ago,” Frigeni said. Investment in wind energy, which saw a record 4.9 gigawatts of offshore wind projects come onstream globally in 2017, according to a Deloitte Insight commentary, has also provided a welcome fillip for semi-submersible and module carrier operators, helping to support the sector even as volatile oil prices curbed investment. The key offshore wind markets of the UK, Germany, Denmark, and China will be joined by the US and Southeast Asia by 2030, analysts said. But most of the focus for RollDock and Cosco remains in the US and Europe, Middle East, and Africa (EMEA) region. “Some 75 percent of our business is in the US,” Frigeni said. This US focus extends to energy companies and their EPC contractors such as Bechtel and Fluor. While the primary focus is on LNG and oil projects, Frigeni said the shale boom is also driving investment by petrochemical companies in midstream projects — propane dehydrogenation (PDH) and ethylene plants that create chemicals and plastics used in clothing, tires, and packaging. Petrochemical products are expected to account for about 35 percent of global oil and gas demand growth by 2030, rising to nearly 50 percent by 2050, according to the International Energy Agency, and the American Chemistry Council estimates shale boom-related investment by the US chemicals industry is now more than $200 billion. “Today the market is more related to midstream — plastics, etc. — and LNG, especially in the US,” Frigeni said. “America is going through a second boom, a second wave of energy projects due to the development of midstream projects. Gas prices are plateauing, which is why midstream companies are using technology to convert gas into plastics. “Now nobody is drilling for oil. Energy companies are mainly drilling for gas,” he added. “Drilling for offshore oil in the US has gone pretty much dead ever since the Macondo accident in 2010.” Contact Keith Wallis at keithwallis@hotmail.com .

Breakbulk News

Slow market hampers open-deck, semi-submersible carriers

<div class="phx-topic abstract-wrapper">The terminal capable of ultimately handling 5.7 million TEUs annually will be global terminal operator’s third in Vietnam. </div>

The terminal capable of ultimately handling 5.7 million TEUs annually will be global terminal operator’s third in Vietnam.

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<div class="phx-topic">APM Terminals and its long-starting local partner Hateco Group are set for a 50-year concession to develop the $1.8-billion Lieu Chieu container terminal in the central Vietnam port city of Da Nang. The duo was approved by the People’s Committee of Da Nang on Tuesday — the local government — as the preferred bidder for a terminal with an annual capacity of 5.7 million TEU. Work is due to start later this year with the first two berths due to open in 2028, according to an APM Terminals spokesperson. Full completion is expected by 2035. Container lines, supported by record profits from disruption, are investing more in marine terminals to gain better control of landside operations and mitigate port congestion. Maersk’s stakes and investment in marine terminals, such as Tanjung Pelepas in Malaysia, enable the Gemini Cooperation's hub-and-spoke network with partner Hapag-Lloyd. US tariffs on China have made Vietnam a more attractive origin of US imports, with the latter’s share of laden inbound shipments rising to 12% last year from 9.9% in 2024, according to PIERS, a sister company of the Journal of Commerce. APM Terminals, Hateco Group and Hateco Port Company will build, operate and manage the terminal which will have eight container berths with a total quay 9,022 feet capable of handling 18,000-TEU container ships. There will also be a barge berth for vessels up to 5,000 metric tons to support local cargo consolidation and distribution, easing pressure on the regional road network, and reducing transport costs. The facility, midway between the major ports of Haiphong in the north near Hanoi and Ho Chi Minh in the south, is expected to become a key hub for cargo in Vietnam’s central provinces and neighboring Laos as well as transshipment traffic. The facility is the second to be jointly developed by APM Terminals division and Hateco after the two firms won a concession to build and operate the Hateco Haiphong International Container Terminal (HHIT) which opened last July. The two berth terminal at Haiphong’s Lach Huyen port in northern Vietnam can handle 18,000 TEU sized ships. Da Nang will be APM Terminals third facility in Vietnam — the firm operates the two-berth 2.1-million-TEU capacity Cai Mep International Terminal 31 miles south-east of Ho Chin Minh City. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

APM Terminals and its long-starting local partner Hateco Group are set for a 50-year concession to develop the $1.8-billion Lieu Chieu container terminal in the central Vietnam port city of Da Nang. The duo was approved by the People’s Committee of Da Nang on Tuesday — the local government — as the preferred bidder for a terminal with an annual capacity of 5.7 million TEU. Work is due to start later this year with the first two berths due to open in 2028, according to an APM Terminals spokesperson. Full completion is expected by 2035. Container lines, supported by record profits from disruption, are investing more in marine terminals to gain better control of landside operations and mitigate port congestion. Maersk’s stakes and investment in marine terminals, such as Tanjung Pelepas in Malaysia, enable the Gemini Cooperation's hub-and-spoke network with partner Hapag-Lloyd. US tariffs on China have made Vietnam a more attractive origin of US imports, with the latter’s share of laden inbound shipments rising to 12% last year from 9.9% in 2024, according to PIERS, a sister company of the Journal of Commerce. APM Terminals, Hateco Group and Hateco Port Company will build, operate and manage the terminal which will have eight container berths with a total quay 9,022 feet capable of handling 18,000-TEU container ships. There will also be a barge berth for vessels up to 5,000 metric tons to support local cargo consolidation and distribution, easing pressure on the regional road network, and reducing transport costs. The facility, midway between the major ports of Haiphong in the north near Hanoi and Ho Chi Minh in the south, is expected to become a key hub for cargo in Vietnam’s central provinces and neighboring Laos as well as transshipment traffic. The facility is the second to be jointly developed by APM Terminals division and Hateco after the two firms won a concession to build and operate the Hateco Haiphong International Container Terminal (HHIT) which opened last July. The two berth terminal at Haiphong’s Lach Huyen port in northern Vietnam can handle 18,000 TEU sized ships. Da Nang will be APM Terminals third facility in Vietnam — the firm operates the two-berth 2.1-million-TEU capacity Cai Mep International Terminal 31 miles south-east of Ho Chin Minh City. Contact Keith Wallis at keithwallis@hotmail.com .

Port News

Port infrastructure

Marine terminals

International ports

Maritime

APM Terminals to build $1.8 billion terminal in Da Nang

<div class="phx-topic abstract-wrapper">Broad use of Section 301 tariffs, with 60 US trading partners now being scrutinized, provide a window into the administration’s next phase of tariff applications as it seeks to redefine US trade. </div>

Broad use of Section 301 tariffs, with 60 US trading partners now being scrutinized, provide a window into the administration’s next phase of tariff applications as it seeks to redefine US trade.

<div class="phx-topic">Importers buoyed by a February US Supreme Court decision that overturned billions of dollars of tariffs they paid are now coming to grips with a new wave of tariffs that are likely to burden their inventory replenishment and holiday shipping plans. The US Trade Representative (USTR) last week launched two separate Section 301 investigations covering a total of 60 countries: one related to “structural excess capacity and production in manufacturing sectors” and a second aimed at forced labor. Should the investigations result in additional tariffs — widely expected to be the outcome — those duties will heap more cost pressure and customs administrative work on US importers, as well as reduce the appeal of sourcing from countries seen as lower-tariff alternatives to China. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6187602_0.1.jpg"></img></div>More immediately, the tariffs could land just as US retailers typically begin peak season ordering ahead of the winter holidays. That will have an impact on containerized US import market share. Vietnam, for example, saw its share of inbound US volumes rise to 12% in 2025 from 9.9% in 2024, mostly at the expense of mainland China, whose share fell to 36% from 40.4% in 2024, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. <h3>Expected pivot </h3>The two sets of investigations can be viewed as the Trump administration clearly pivoting from tariffs assessed through executive order, by way of the International Emergency Economic Powers Act (IEEPA), to ones with a more straightforward track record of surviving legal challenges. The Supreme Court on Feb. 20 <a href="https://www.joc.com/article/us-supreme-court-rules-against-trump-in-critical-ieepa-tariff-case-6173568">ruled that the IEEPA tariffs had been levied illegally</a>, and the US Court of International Trade has ordered US Customs and Border Protection to <a href="https://www.joc.com/article/cbp-lays-out-initial-tariff-refund-plan-that-requires-minimal-work-from-importers-6183418">create a process to refund importers more than $160 billion in tariffs</a> they paid, plus interest. Trade experts said they expected the administration to quickly use other tools to progress with its tariff-focused foreign trade policy in the event the IEEPA tariffs were struck down. The structural capacity investigation will look into whether 16 different countries or trading blocs, including China, India, Vietnam, Indonesia and the EU, are imposing policies or practices that “burden or restrict US commerce.” The broader investigation into forced labor covers virtually every major US trading partner and can be seen as the USTR trying to replicate the scale of President Trump’s so-called Liberation Day tariffs that were eventually struck down. In the interim, Trump has used Section 122 of the Trade Act to temporarily assess 10% tariffs on all US imports, outside of goods exempted through existing trade agreements. The pace of the investigations also hints at the administration’s desire for the new tariffs, or at least the threat thereof, to be in place by the time the Section 122 duties expire on July 27. Comments on both investigations are due April 15, with hearings for the forced labor and structural capacity inquiries scheduled for April 28 and May 5, respectively. In announcing the probes, USTR said it has requested consultations with all governments named in the investigations. All the economies named in the structural capacity inquiry are also involved in the forced labor investigations, which means the trade representative will be looking to have conversations with 60 different entities in the coming months, presumably to use the threat of tariffs as leverage. <h3>‘One of the most powerful weapons’</h3>Deborah Elms, head of trade policy at Singapore-based Hinrich Foundation, said the USTR’s use of Section 301 in this context, while likely to be effective in that it will allow the administration to impose new tariffs, runs counter to the initial intent of the statute. During President Trump’s first term, the USTR was able to assess 25% Section 301 tariffs on Chinese goods that have remained despite two changes of power in the executive branch. The scope of the new Section 301 tariffs the USTR is seeking would dwarf those previously implemented, though there has yet to be any formal discussion about the level of tariffs that might result from these investigations “Section 301 was originally intended as a tool to get countries to negotiate and remove barriers to US exports,” she wrote in a March 12 blog. “This administration appears keen to retaliate first and discuss mostly later.” For importers, the intent of Section 301 tariffs matter because they are likely to be more durable and legally defensible than either the IEEPA or Section 122 tariffs. Additionally, unless countries are able to negotiate their way out of prospective Section 301 tariffs by providing market access to US exporters or curtailing domestic production subsidies, importers will find there are fewer avenues to escape an added cost on international trade. Elms described Section 301 as “one of the most powerful weapons in the trade policy arsenal for any US executive branch pursuing aggressive unilateralism,” adding that it provides a range of options under the broad category of “relief from unfair trade practices.” Elms noted the 16 industries under investigation in the “structural capacity” probe range from steel production in China to chemical manufacturing in Germany and currency manipulation in Switzerland. The two investigations are also unlikely to be the last. USTR Jamieson Greer has previously hinted at the potential for cases focused on digital trade and digital services taxes. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

Importers buoyed by a February US Supreme Court decision that overturned billions of dollars of tariffs they paid are now coming to grips with a new wave of tariffs that are likely to burden their inventory replenishment and holiday shipping plans. The US Trade Representative (USTR) last week launched two separate Section 301 investigations covering a total of 60 countries: one related to “structural excess capacity and production in manufacturing sectors” and a second aimed at forced labor. Should the investigations result in additional tariffs — widely expected to be the outcome — those duties will heap more cost pressure and customs administrative work on US importers, as well as reduce the appeal of sourcing from countries seen as lower-tariff alternatives to China. More immediately, the tariffs could land just as US retailers typically begin peak season ordering ahead of the winter holidays. That will have an impact on containerized US import market share. Vietnam, for example, saw its share of inbound US volumes rise to 12% in 2025 from 9.9% in 2024, mostly at the expense of mainland China, whose share fell to 36% from 40.4% in 2024, according to PIERS, a sister product of the Journal of Commerce within S&P Global. Expected pivot The two sets of investigations can be viewed as the Trump administration clearly pivoting from tariffs assessed through executive order, by way of the International Emergency Economic Powers Act (IEEPA), to ones with a more straightforward track record of surviving legal challenges. The Supreme Court on Feb. 20 ruled that the IEEPA tariffs had been levied illegally , and the US Court of International Trade has ordered US Customs and Border Protection to create a process to refund importers more than $160 billion in tariffs they paid, plus interest. Trade experts said they expected the administration to quickly use other tools to progress with its tariff-focused foreign trade policy in the event the IEEPA tariffs were struck down. The structural capacity investigation will look into whether 16 different countries or trading blocs, including China, India, Vietnam, Indonesia and the EU, are imposing policies or practices that “burden or restrict US commerce.” The broader investigation into forced labor covers virtually every major US trading partner and can be seen as the USTR trying to replicate the scale of President Trump’s so-called Liberation Day tariffs that were eventually struck down. In the interim, Trump has used Section 122 of the Trade Act to temporarily assess 10% tariffs on all US imports, outside of goods exempted through existing trade agreements. The pace of the investigations also hints at the administration’s desire for the new tariffs, or at least the threat thereof, to be in place by the time the Section 122 duties expire on July 27. Comments on both investigations are due April 15, with hearings for the forced labor and structural capacity inquiries scheduled for April 28 and May 5, respectively. In announcing the probes, USTR said it has requested consultations with all governments named in the investigations. All the economies named in the structural capacity inquiry are also involved in the forced labor investigations, which means the trade representative will be looking to have conversations with 60 different entities in the coming months, presumably to use the threat of tariffs as leverage. ‘One of the most powerful weapons’ Deborah Elms, head of trade policy at Singapore-based Hinrich Foundation, said the USTR’s use of Section 301 in this context, while likely to be effective in that it will allow the administration to impose new tariffs, runs counter to the initial intent of the statute. During President Trump’s first term, the USTR was able to assess 25% Section 301 tariffs on Chinese goods that have remained despite two changes of power in the executive branch. The scope of the new Section 301 tariffs the USTR is seeking would dwarf those previously implemented, though there has yet to be any formal discussion about the level of tariffs that might result from these investigations “Section 301 was originally intended as a tool to get countries to negotiate and remove barriers to US exports,” she wrote in a March 12 blog. “This administration appears keen to retaliate first and discuss mostly later.” For importers, the intent of Section 301 tariffs matter because they are likely to be more durable and legally defensible than either the IEEPA or Section 122 tariffs. Additionally, unless countries are able to negotiate their way out of prospective Section 301 tariffs by providing market access to US exporters or curtailing domestic production subsidies, importers will find there are fewer avenues to escape an added cost on international trade. Elms described Section 301 as “one of the most powerful weapons in the trade policy arsenal for any US executive branch pursuing aggressive unilateralism,” adding that it provides a range of options under the broad category of “relief from unfair trade practices.” Elms noted the 16 industries under investigation in the “structural capacity” probe range from steel production in China to chemical manufacturing in Germany and currency manipulation in Switzerland. The two investigations are also unlikely to be the last. USTR Jamieson Greer has previously hinted at the potential for cases focused on digital trade and digital services taxes. Contact Eric Johnson at eric.johnson@spglobal.com .

Transport, Trade and Regulation News

Supply chain

Potential new US tariffs cloud sourcing strategies, peak season demand

<div class="phx-topic abstract-wrapper">The recent increase in intermodal share in the face of declining West Coast share is intriguing, and it might be signaling a more significant change in the situation, writes Larry Gross. </div>

The recent increase in intermodal share in the face of declining West Coast share is intriguing, and it might be signaling a more significant change in the situation, writes Larry Gross.

<div class="phx-topic">The share of imports arriving in the US and Western Canada that travel inland via rail has been in a long-term decline. Changes in shipping patterns are a big reason why, with major implications as to where things are heading and the railroads’ ability to affect the result. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6187602_0.1.jpg"></img></div>The chart below tracks two measures over the past 16 years. The first is the share of US plus Western Canadian import TEUs arriving on the West Coast. As has been well documented, this share has been in a long-term decline as importers have moved away from West Coast-centric strategies towards four- and five-corner strategies that provide greater diversification and lower costs. Twelve-month moving average West Coast share declined by over 10 points from 59% in 2010 to under 49% in 2025. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="651db556-cc65-494c-abea-84774e97a373"></dynamic-object></div>The second statistic is the percentage of import TEUs arriving that travel inland from the coast via intermodal. This includes both inland point intermodal (IPI) loads and South California transloads. Intermodal share has also seen a long-term decline similar to that of West Coast share. The linear trends over this period for both statistics are almost parallel. The correlation was very strong between 2014 through mid-2022. We know that intermodal share is higher off the West Coast than elsewhere, due primarily to length-of-haul effects. The longer runs from the West Coast to the consumption centers inland are much more intermodal-friendly than the short, dispersed hauls out of other port regions. It is interesting, however, to note that since mid-2022, this tight correlation has loosened significantly. Viewed on a 12-month moving average basis, intermodal share began to recover at that point from the post-pandemic surge congestion, a full year before West Coast share turned upward. In 2023, intermodal share resumed declining, while West Coast share continued to rise. Then, in 2025, West Coast share began to decline once again, but intermodal share began to move up. <h3>Inversely correlated? </h3>Does this de-coupling indicate that the basic bond has been broken between these two measures? I don’t think so. But it does indicate that other factors (congestion, surges, and so forth) have taken control for the time being. It may also say that these inter-dependent but separate systems have reacted to the recent volatility differently and each with their own timing. On the other hand, the recent increase in intermodal share in the face of declining West Coast share is intriguing. It might be signaling a more significant change in the situation and certainly bears watching. If the inter-dependence remains intact, what does that indicate for the future? At the start of the year, West Coast share could have reasonably been expected to continue the decline that resumed in 2025. The Gaza situation had stabilized, and the Red Sea/Suez routing was slowly opening back up. The East Coast option was looking better all the time. But of course, the Iran hostilities have now thrown that all out the window. The trans-Pacific trade is, at least for the moment, more isolated from the disruption. West Coast share can be expected to stabilize or even improve. This will be an intermodal tailwind for the time being. This analysis also tells us that most of what happens here is completely out of the railroads’ control. They will continue to be subject to the routing decisions of the ocean carriers and the importers. It is on the domestic side of the intermodal house where the railroads have more ability to control their destiny and their share. Larry Gross is president and founder of Gross Transportation Consulting. Contact him at <a href="mailto:lawrencejgross@gmail.com">lawrencejgross@gmail.com</a>. </div>

The share of imports arriving in the US and Western Canada that travel inland via rail has been in a long-term decline. Changes in shipping patterns are a big reason why, with major implications as to where things are heading and the railroads’ ability to affect the result. The chart below tracks two measures over the past 16 years. The first is the share of US plus Western Canadian import TEUs arriving on the West Coast. As has been well documented, this share has been in a long-term decline as importers have moved away from West Coast-centric strategies towards four- and five-corner strategies that provide greater diversification and lower costs. Twelve-month moving average West Coast share declined by over 10 points from 59% in 2010 to under 49% in 2025. The second statistic is the percentage of import TEUs arriving that travel inland from the coast via intermodal. This includes both inland point intermodal (IPI) loads and South California transloads. Intermodal share has also seen a long-term decline similar to that of West Coast share. The linear trends over this period for both statistics are almost parallel. The correlation was very strong between 2014 through mid-2022. We know that intermodal share is higher off the West Coast than elsewhere, due primarily to length-of-haul effects. The longer runs from the West Coast to the consumption centers inland are much more intermodal-friendly than the short, dispersed hauls out of other port regions. It is interesting, however, to note that since mid-2022, this tight correlation has loosened significantly. Viewed on a 12-month moving average basis, intermodal share began to recover at that point from the post-pandemic surge congestion, a full year before West Coast share turned upward. In 2023, intermodal share resumed declining, while West Coast share continued to rise. Then, in 2025, West Coast share began to decline once again, but intermodal share began to move up. Inversely correlated? Does this de-coupling indicate that the basic bond has been broken between these two measures? I don’t think so. But it does indicate that other factors (congestion, surges, and so forth) have taken control for the time being. It may also say that these inter-dependent but separate systems have reacted to the recent volatility differently and each with their own timing. On the other hand, the recent increase in intermodal share in the face of declining West Coast share is intriguing. It might be signaling a more significant change in the situation and certainly bears watching. If the inter-dependence remains intact, what does that indicate for the future? At the start of the year, West Coast share could have reasonably been expected to continue the decline that resumed in 2025. The Gaza situation had stabilized, and the Red Sea/Suez routing was slowly opening back up. The East Coast option was looking better all the time. But of course, the Iran hostilities have now thrown that all out the window. The trans-Pacific trade is, at least for the moment, more isolated from the disruption. West Coast share can be expected to stabilize or even improve. This will be an intermodal tailwind for the time being. This analysis also tells us that most of what happens here is completely out of the railroads’ control. They will continue to be subject to the routing decisions of the ocean carriers and the importers. It is on the domestic side of the intermodal house where the railroads have more ability to control their destiny and their share. Larry Gross is president and founder of Gross Transportation Consulting. Contact him at lawrencejgross@gmail.com .

Surface

Trans-Pacific

North American ports

North-American rail

Intermodal providers

Ocean shipping patterns erode intermodal share from West Coast: analyst

<div class="phx-topic abstract-wrapper">After a pause in trans-Pacific service contract negotiations caused by the war in the Middle East, talks are expected to move forward now that the largest US retailer has concluded some of its agreements.</div>

After a pause in trans-Pacific service contract negotiations caused by the war in the Middle East, talks are expected to move forward now that the largest US retailer has concluded some of its agreements.

<div class="phx-topic">Container lines that paused trans-Pacific service contract talks to assess the impact of the war in the Middle East are back at the table, and expectations are that major retailers will sign in the coming week now that Walmart has finalized its 2026–27 contracts with a half-dozen carriers. Walmart’s move opens the door for other major retailers and, in turn, smaller importers and then non-vessel operating common carriers to ink their own service contracts, which typically go into effect May 1. Despite the <a href="https://www.joc.com/article/china-india-warn-carriers-on-higher-pricing-tied-to-middle-east-conflict-6183986">unknowns in terms of length and scope of the now two-week-long Middle East war</a>, carriers say big-box retailers want to lock in vessel capacity. Walmart, <a href="">the largest US importer</a>, has wrapped up its contract discussions with its core carriers, two sources familiar with the matter told the Journal of Commerce.  Carriers, and some forwarders, are urging customers to move expeditiously in their contract negotiations, rather than allowing uncertainties in global trade to deter them. “We now have seen an unpredictable shock to the global ocean market in like four of the last six years,” a carrier executive who asked not to be named told the Journal of Commerce. “Some BCOs [beneficial cargo owners] recognized that and wanted to take risk off the table; they signed early and at higher rates than many were predicting.” The executive added that analyst forecasts of supply and demand have rarely matched reality in recent years due to that outsized volatility. Geopolitical events including diversions away from the Red Sea, unpredictable US tariff policy and even more weather events, impacting ocean reliability, have begun to shift some shippers’ thinking, he said. “Some shippers have come to realize that pushing carriers well below breakeven to save a few cents on their cost of goods is not worth the risk of a major unpredictable event happening,” the executive said. <h3>Recouping higher fuel costs </h3>While securing space remains paramount for cargo owners, rising bunker fuel prices, driven by the closure of the Strait of Hormuz, <a href="https://www.joc.com/article/fmc-says-closely-monitoring-carrier-rate-moves-tied-to-middle-east-war-6184781">is also driving contract discussions regarding bunker fuel adjustment factors</a>. Shippers are reluctant to compensate carriers for the rising operating costs tied to the Middle East on a trade lane that is not directly impacted. “The uncertainty and waiting around for clarity or resolution is not helpful to anyone,” said Kevin Parkerson, a consultant and former logistics manager at retailers. “Yes, it may impact overall capacity. Yes, it may impact fuel prices. But at this point, that shouldn’t delay the process of contracting. Everybody seems to be proceeding cautiously.” At the moment, securing capacity in the Asia-US West Coast trade is not a significant issue that would slow negotiations. “Asia to the West Coast will be fine,” a second carrier executive told the Journal of Commerce, noting that if the war in the Middle East drags on for some weeks, East Coast routings from the Indian sub-continent could be impacted by the <a href="https://www.joc.com/article/waves-of-diverted-containers-swamping-middle-east-ports-6183989">congestion that is already building at some ports in the region</a>. In the interim, most importers would be wise to secure the minimum quantity commitments in their contracts as soon as they have a handle on what their space requirements will be, a third carrier executive said. “Those BCOs who are slow-walking their negotiations to wait for better prices — it may backfire,” the executive said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.</div>

Container lines that paused trans-Pacific service contract talks to assess the impact of the war in the Middle East are back at the table, and expectations are that major retailers will sign in the coming week now that Walmart has finalized its 2026–27 contracts with a half-dozen carriers. Walmart’s move opens the door for other major retailers and, in turn, smaller importers and then non-vessel operating common carriers to ink their own service contracts, which typically go into effect May 1. Despite the unknowns in terms of length and scope of the now two-week-long Middle East war , carriers say big-box retailers want to lock in vessel capacity. Walmart,  the largest US importer , has wrapped up its contract discussions with its core carriers, two sources familiar with the matter told the Journal of Commerce.   Carriers, and some forwarders, are urging customers to move expeditiously in their contract negotiations, rather than allowing uncertainties in global trade to deter them. “We now have seen an unpredictable shock to the global ocean market in like four of the last six years,” a carrier executive who asked not to be named told the Journal of Commerce. “Some BCOs [beneficial cargo owners] recognized that and wanted to take risk off the table; they signed early and at higher rates than many were predicting.” The executive added that analyst forecasts of supply and demand have rarely matched reality in recent years due to that outsized volatility. Geopolitical events including diversions away from the Red Sea, unpredictable US tariff policy and even more weather events, impacting ocean reliability, have begun to shift some shippers’ thinking, he said. “Some shippers have come to realize that pushing carriers well below breakeven to save a few cents on their cost of goods is not worth the risk of a major unpredictable event happening,” the executive said. Recouping higher fuel costs While securing space remains paramount for cargo owners, rising bunker fuel prices, driven by the closure of the Strait of Hormuz, is also driving contract discussions regarding bunker fuel adjustment factors . Shippers are reluctant to compensate carriers for the rising operating costs tied to the Middle East on a trade lane that is not directly impacted. “The uncertainty and waiting around for clarity or resolution is not helpful to anyone,” said Kevin Parkerson, a consultant and former logistics manager at retailers. “Yes, it may impact overall capacity. Yes, it may impact fuel prices. But at this point, that shouldn’t delay the process of contracting. Everybody seems to be proceeding cautiously.”  At the moment, securing capacity in the Asia-US West Coast trade is not a significant issue that would slow negotiations. “Asia to the West Coast will be fine,” a second carrier executive told the Journal of Commerce, noting that if the war in the Middle East drags on for some weeks, East Coast routings from the Indian sub-continent could be impacted by the congestion that is already building at some ports in the region . In the interim, most importers would be wise to secure the minimum quantity commitments in their contracts as soon as they have a handle on what their space requirements will be, a third carrier executive said. “Those BCOs who are slow-walking their negotiations to wait for better prices — it may backfire,” the executive said. Contact Bill Mongelluzzo at  bill.mongelluzzo@spglobal.com .

Container Shipping News

Trans-Pacific contract talks accelerating after Walmart signs

<div class="phx-topic abstract-wrapper">The Meridian Speedway dispute is important because it’s one of the primary routes where a combined Union Pacific-Norfolk Southern railroad would look to take market share from truckload. </div>

The Meridian Speedway dispute is important because it’s one of the primary routes where a combined Union Pacific-Norfolk Southern railroad would look to take market share from truckload.

<div class="phx-topic">The US Surface Transportation Board (STB) will not intervene in a dispute over the Meridian Speedway, a critical intermodal route connecting the West Coast to the US Southeast where three railroads must team up to execute service. The unanimous ruling, issued Friday, culminates more than six months of arguing between Union Pacific Railroad, Norfolk Southern Railway, and Canadian Pacific Kansas City. CPKC applauded the decision that "exemplifies behavior typical of Union Pacific attempting to bully its way," in a statement. UP, expressing disappointment in the system, told the Journal of Commerce that Canadian Pacific changed operations and service on the line when it acquired Kanas City Southern, but UP also said it was moving on post-decision.The dispute boiled over last summer when FedEx and UPS trucked cargo around the stretch of track to bypass the disruptions. The two parcel giants lean on the railroads to move parcels across the US and impose stringent requirements for on-time performance in their service agreements. The Meridian Speedway, a nearly 300-mile stretch between Louisiana and Mississippi, is a joint venture in which CPKC controls 70% and Norfolk Southern controls the remaining 30%. CPKC oversees dispatching and operations. The Meridian Speedway slashes more than three days between Los Angeles and Atlanta compared with going through Memphis. The dispute centers around CPKC’s decision to restrict train lengths to 8,500 feet, while UP and NS prefer trains that are 11,000 feet long. UP argues the restriction forces them to break up the containers into two different blocks, and CPKC provides substandard service on the second train. CPKC counters that most of the sidings — akin to the shoulder of a highway — are not long enough to handle an 11,000-foot train. When there is a conflict between two trains, the CPKC train is often the one stopped for hours at a time to let the 11,000-foot UP train pass. In an unanimous decision, though, the STB decided not to intervene. “As CPKC notes, the increased dwell of UP’s ‘second train’ could also be attributable to an agreement between CPKC and [Norfolk Southern] that the second train would be scheduled to depart four hours and forty minutes after the first,” STB wrote in the ruling. “Given these facts, there are not sufficient indicia that the conditions the Board imposed in the CP/KCS merger approval are implicated by the increased dwell at UP’s Hollywood Yard.” NS filed a complaint last October but eventually reached an agreement with CPKC and dropped the cast. Last month, however, UP filed a new complaint, citing increased dwell times for the containers going on the second train. UP asked the board to launch an investigation. The Meridian Speedway is a lynchpin to the pending UP-NS transaction before regulators, a route identified as critical to converting more than 1.17 million truckloads to intermodal over three years. However, UP’s application also called for running 11,000-foot trains, the very length that is at the heart of the dispute. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

The US Surface Transportation Board (STB) will not intervene in a dispute over the Meridian Speedway, a critical intermodal route connecting the West Coast to the US Southeast where three railroads must team up to execute service. The unanimous ruling, issued Friday, culminates more than six months of arguing between Union Pacific Railroad, Norfolk Southern Railway, and Canadian Pacific Kansas City. CPKC applauded the decision that "exemplifies behavior typical of Union Pacific attempting to bully its way," in a statement. UP, expressing disappointment in the system, told the Journal of Commerce that Canadian Pacific changed operations and service on the line when it acquired Kanas City Southern, but UP also said it was moving on post-decision. The dispute boiled over last summer when FedEx and UPS trucked cargo around the stretch of track to bypass the disruptions. The two parcel giants lean on the railroads to move parcels across the US and impose stringent requirements for on-time performance in their service agreements. The Meridian Speedway, a nearly 300-mile stretch between Louisiana and Mississippi, is a joint venture in which CPKC controls 70% and Norfolk Southern controls the remaining 30%. CPKC oversees dispatching and operations. The Meridian Speedway slashes more than three days between Los Angeles and Atlanta compared with going through Memphis. The dispute centers around CPKC’s decision to restrict train lengths to 8,500 feet, while UP and NS prefer trains that are 11,000 feet long. UP argues the restriction forces them to break up the containers into two different blocks, and CPKC provides substandard service on the second train. CPKC counters that most of the sidings — akin to the shoulder of a highway — are not long enough to handle an 11,000-foot train. When there is a conflict between two trains, the CPKC train is often the one stopped for hours at a time to let the 11,000-foot UP train pass. In an unanimous decision, though, the STB decided not to intervene. “As CPKC notes, the increased dwell of UP’s ‘second train’ could also be attributable to an agreement between CPKC and [Norfolk Southern] that the second train would be scheduled to depart four hours and forty minutes after the first,” STB wrote in the ruling. “Given these facts, there are not sufficient indicia that the conditions the Board imposed in the CP/KCS merger approval are implicated by the increased dwell at UP’s Hollywood Yard.” NS filed a complaint last October but eventually reached an agreement with CPKC and dropped the cast. Last month, however, UP filed a new complaint, citing increased dwell times for the containers going on the second train. UP asked the board to launch an investigation. The Meridian Speedway is a lynchpin to the pending UP-NS transaction before regulators, a route identified as critical to converting more than 1.17 million truckloads to intermodal over three years. However, UP’s application also called for running 11,000-foot trains, the very length that is at the heart of the dispute. Contact Ari Ashe at ari.ashe@spglobal.com .

Rail News

STB declines to intervene on Meridian Speedway dispute

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