<div class="phx-topic abstract-wrapper">The clouds of volcanic ash that all but shut down European airspace were just the latest reminder of the unpredictability in supply chains.</div>

The clouds of volcanic ash that all but shut down European airspace were just the latest reminder of the unpredictability in supply chains.

<div>The clouds of volcanic ash that all but shut down European airspace were just the latest reminder of the unpredictability in supply chains. Occurring without warning and impossible to predict, the eruption and its consequences validated all of companies&amp;rsquo; time, efforts and money spent on developing contingency plans for supply chain disruption. If the September 11 attacks and the three-day shutdown of U.S. airspace that followed transformed how companies view supply chain risk, last week&amp;rsquo;s episode, which had only begun to ease as this issue went to press, confirmed it. We don&amp;rsquo;t know what the next major shock to the...

The clouds of volcanic ash that all but shut down European airspace were just the latest reminder of the unpredictability in supply chains. Occurring without warning and impossible to predict, the eruption and its consequences validated all of companies&rsquo; time, efforts and money spent on developing contingency plans for supply chain disruption. If the September 11 attacks and the three-day shutdown of U.S. airspace that followed transformed how companies view supply chain risk, last week&rsquo;s episode, which had only begun to ease as this issue went to press, confirmed it. We don&rsquo;t know what the next major shock to the international transport system will be, but we have all the evidence needed that something will happen and without warning, whether because of a public health emergency, natural disaster, terrorist attack, strike or some other unknown factor. The focus on risk will only increase, given that the climb out the recession is being characterized by less inventory and leaner supply chains, which will only increase the risk from disruption and the focus on risk mitigation. Retail logistics directors speaking at a New Jersey meeting of the Council of Supply Chain Management Professionals this month agreed that, having been caught with too much inventory when the recession hit, a more conservative mindset with regard to inventory levels has taken hold and can be expected to last a while. When it comes to inventories, &ldquo;No one&rsquo;s going to open up the floodgates,&rdquo; Paul Cox, Foot Locker&rsquo;s vice president of global transportation and supply chain, told the group. You can see the mindset of risk mitigation play out in many ways, including in port selections. The growth of Prince Rupert north of Vancouver, British Columbia, can be attributed in part, carriers say, to shippers spreading out their cargo volumes among several port gateways to minimize the impact of disruption at any one of them. In fact, it seems the private sector is further along in preparing for crisis than the government is; the blanket shutdown of European airspace, when such an action may not have been warranted and led to unnecessary losses by airlines, illustrated an alarming lack of planning and ability to manage through a fast-moving crisis. While disruptive to millions of travelers, including Journal of Commerce Editorial Director Paul Page, who was stranded in London for six days, the supply chain disruption this time was largely limited to airfreight. Ocean shipping was essentially unaffected. Losses in perishables will be the greatest, but delays also will hit electronics, fashion and other high-value cargo typically moved by air. The disruption struck as air freight volumes are recovering strongly versus prior-year numbers and edging closer to pre-crisis levels. Air freight in January and February was more than 20 percent higher than the first two months of 2009 and just 3 to 4 percent below pre-recession levels in January-February 2008, according to transportation analyst and consultant MergeGlobal. Behind the surge is a combination of inventory restocking, pickup in consumer spending and some shift from ocean to air because of container backups in Asia. The main questions emerging from the Europe predicament are how long it will take for airlines to get their networks back into balance, how long air freight backups will remain, and whether there will be any lasting economic damage. Assuming European skies continue to reopen, airline networks will likely be back to normal within days. Airlines&rsquo; networks typically bounce back quickly from weather disruption, and as widespread as the disruption was &mdash; 95,000 flights canceled as of April 20, six days into the crisis &mdash; this will not be much different. But air freight backlogs may take longer to clear, perhaps as long as two to three weeks, in part because many flights will be operating at 100 percent capacity as passenger backlogs clear, meaning less belly space for cargo on passenger flights, said David Hoppin, a MergeGlobal analyst. The longer-term impact is most important. Economically, the sharp increases in shipping volumes &mdash; both air and sea freight &mdash; since late last year are still viewed, along with many other positive looking indicators, as incomplete evidence of a recovery. Many still see the possibility of a backward economic slide. A large portion of the surge in demand, Hoppin said, appears to be due to inventory restocking rather than driven by underlying demand. With the stimulus waning in impact, the recovery could lose steam, he said. The &ldquo;air freight rebound is largely attributable to inventory replenishment rather than resurgent final demand (consumer spending and business investment),&rdquo; MergeGlobal said. &ldquo;It is not yet known how fast air freight will grow once the current inventory replenishment cycle is complete.&rdquo; Peter Tirschwell is senior vice president for strategy at UBM Global Trade. He can be contacted at ptirschwell@joc.com .

Air Cargo

Air Cargo Carriers News

Eruption and Disruption

<div class="phx-topic abstract-wrapper">Despite significant injections of reefer capacity in early 2025, US cold chain stakeholders say they continue to face equipment scarcity issues.</div>

Despite significant injections of reefer capacity in early 2025, US cold chain stakeholders say they continue to face equipment scarcity issues.

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<div class="phx-topic">The production of refrigerated containers globally is at its highest level in at least a decade, but that hasn’t been enough to relieve reefer scarcity amid increased maintenance needs, retirement of older equipment, elevated demand on some regional trades and rising market volatility, US market stakeholders say. Figures prepared for the Journal of Commerce by maritime consultancy Drewry show 93,000 TEUs of reefer equipment entered the global market in the first quarter of 2025, up almost 145% from the same period of 2024. “On average, over the last 10 years, the industry has produced somewhere between 275,000 to 300,000 TEUs of reefer equipment annually,” said Bob Sappio, CEO of refrigerated container lessor SeaCube. “This year, we’re expecting there to be closer to 350,000 TEUs.” Nearly all reefer containers are produced by three Chinese companies: China International Marine Containers, Dong Fang International Containers and Guangdong FUWA Engineering Group Co. According to Sappio, the lead time for ordering new 40-foot reefer containers has doubled to about four months. Costs are also going up, as recent steel tariffs raise prices of any equipment purchases made in the US. <h3>A hot cold chain </h3>Extreme heat is one factor driving up equipment problems. Amanda Oren, vice president of industry strategy for grocery at supply chain planning company RELEX, said that they’ve seen more disruptions due to high temperatures. “The East Coast has been [extremely hot] ...” Oren told the Journal of Commerce. “It’s impacting the supply chain at large for refrigerated product.” According to the National Oceanic and Atmospheric Administration (NOAA), 13 heat records were broken in the 30 days leading up to July 12, with another 14 heat records tied. Many of those were concentrated on the East Coast. A forwarder focused on temperature-controlled shipments told the Journal of Commerce that reefer equipment is put under more stress in high temperatures, and many locations won’t load a reefer until it’s cooled. “Cooling an empty container full of hot air is no easy task,” said the forwarder. “When the [equipment] is put under this kind of stress, any weak points can become fail points, and we see an uptick in maintenance issues and failures when we see temperatures like we have.” As maintenance needs are magnified by elevated temperatures, some aging equipment is already due for retirement, said Sappio. A significant portion of the global reefer fleet is 11 to 14 years old, he said, meaning it’s close to being withdrawn from service. <h3>US demand cooled in May </h3>The US moved record-setting reefer volumes last year, reaching a total of 467,700 TEUs, up 17% compared with 2023, according to PIERS, a sister company of the Journal of Commerce within S&amp; P Global. This May, however, PIERS data shows US reefer exports at 56,254 TEUs, down nearly 20% compared with last year. Similarly, May reefer imports were down 5.4% on the year at 156,733 TEUs, the lowest monthly total since August 2023. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="4ef4b851-58b1-4fdd-b7c5-ad0e1717a1f9"></dynamic-object></div>Oren says tariffs are driving some shippers to diversify supply chains and re-source cargo, further contributing to instability. “We’re starting to see product being sourced that used to come from China looking at different sourcing options, like Southeast Asia or South Korea,” she said. Still, the global reefer market is predicted to grow about 2% annually through 2029, according to figures from Drewry shared during a reefer webinar last month. “The reefer trade is growing okay, but obviously there [are] some areas which are growing faster than others,” Philip Gray, Drewry’s senior associate of reefer shipping, said during the webinar. Oceania to Asia, Central America to North America and North Europe to Asia were the lanes with the most significant growth last year, according to the webinar. But the lack of predictability, sources say, is making it harder for carriers to accurately position equipment to meet the shifting demands of different trades. “Uncertainty and volatility are just going to be our companions, certainly for [the rest] of this year,” said Sappio. “It’s difficult under normal circumstances to accurately forecast, but under these circumstances, it’s nearly impossible.” Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

The production of refrigerated containers globally is at its highest level in at least a decade, but that hasn’t been enough to relieve reefer scarcity amid increased maintenance needs, retirement of older equipment, elevated demand on some regional trades and rising market volatility, US market stakeholders say. Figures prepared for the Journal of Commerce by maritime consultancy Drewry show 93,000 TEUs of reefer equipment entered the global market in the first quarter of 2025, up almost 145% from the same period of 2024. “On average, over the last 10 years, the industry has produced somewhere between 275,000 to 300,000 TEUs of reefer equipment annually,” said Bob Sappio, CEO of refrigerated container lessor SeaCube. “This year, we’re expecting there to be closer to 350,000 TEUs.” Nearly all reefer containers are produced by three Chinese companies: China International Marine Containers, Dong Fang International Containers and Guangdong FUWA Engineering Group Co. According to Sappio, the lead time for ordering new 40-foot reefer containers has doubled to about four months. Costs are also going up, as recent steel tariffs raise prices of any equipment purchases made in the US. A hot cold chain Extreme heat is one factor driving up equipment problems. Amanda Oren, vice president of industry strategy for grocery at supply chain planning company RELEX, said that they’ve seen more disruptions due to high temperatures. “The East Coast has been [extremely hot] ...” Oren told the Journal of Commerce. “It’s impacting the supply chain at large for refrigerated product.” According to the National Oceanic and Atmospheric Administration (NOAA), 13 heat records were broken in the 30 days leading up to July 12, with another 14 heat records tied. Many of those were concentrated on the East Coast. A forwarder focused on temperature-controlled shipments told the Journal of Commerce that reefer equipment is put under more stress in high temperatures, and many locations won’t load a reefer until it’s cooled. “Cooling an empty container full of hot air is no easy task,” said the forwarder. “When the [equipment] is put under this kind of stress, any weak points can become fail points, and we see an uptick in maintenance issues and failures when we see temperatures like we have.” As maintenance needs are magnified by elevated temperatures, some aging equipment is already due for retirement, said Sappio. A significant portion of the global reefer fleet is 11 to 14 years old, he said, meaning it’s close to being withdrawn from service. US demand cooled in May The US moved record-setting reefer volumes last year, reaching a total of 467,700 TEUs, up 17% compared with 2023, according to PIERS, a sister company of the Journal of Commerce within S& P Global. This May, however, PIERS data shows US reefer exports at 56,254 TEUs, down nearly 20% compared with last year. Similarly, May reefer imports were down 5.4% on the year at 156,733 TEUs, the lowest monthly total since August 2023. Oren says tariffs are driving some shippers to diversify supply chains and re-source cargo, further contributing to instability. “We’re starting to see product being sourced that used to come from China looking at different sourcing options, like Southeast Asia or South Korea,” she said. Still, the global reefer market is predicted to grow about 2% annually through 2029, according to figures from Drewry shared during a reefer webinar last month. “The reefer trade is growing okay, but obviously there [are] some areas which are growing faster than others,” Philip Gray, Drewry’s senior associate of reefer shipping, said during the webinar. Oceania to Asia, Central America to North America and North Europe to Asia were the lanes with the most significant growth last year, according to the webinar. But the lack of predictability, sources say, is making it harder for carriers to accurately position equipment to meet the shifting demands of different trades. “Uncertainty and volatility are just going to be our companions, certainly for [the rest] of this year,” said Sappio. “It’s difficult under normal circumstances to accurately forecast, but under these circumstances, it’s nearly impossible.” Contact Laura Robb at laura.robb@spglobal.com .

Maritime

Container Shipping News

Trans-Pacific

Cool Cargo News

Reefer fleet growth yet to show in availability of equipment

<div class="phx-topic abstract-wrapper">A bill reintroduced in the House of Representatives would require customs fees to be directed to covering building and other capital costs related to inspections. </div>

A bill reintroduced in the House of Representatives would require customs fees to be directed to covering building and other capital costs related to inspections.

<div class="phx-topic">US ports and shippers are asking Congress to rein in the costs of customs inspections at local ports of entry, throwing their support behind legislation that would require processing fees to cover expenses related to inspection facilities. In a letter sent last week to six of the bill’s original co-sponsors in the House of Representatives, the American Association of Port Authorities (AAPA) and 26 other groups asked for renewed support of the Customs and Border Protection (CBP) Space Act (Securing Ports and America’s Commerce and Economy). First introduced last year, two of the original co-sponsors, Florida Rep. Laurel Lee and Washington Rep. Marie Gluesenkamp, plan to bring the bill before Congress again this term. The CBP Space Act would require that the merchandise processing fee, which is based on the value of goods imported and can range between $32 and $634, would also cover any capital costs for inspection and other facilities for US customs officers at ports of entry. The fee currently just covers the salaries and other expenses for maintaining officers in the field. The AAPA and other signatories said in the letter that local customs offices have been asking ports to pay for “carpeting, heated driveways, unused computers, TVs, office renovations, and other capital improvements unrelated to cargo and passenger inspections.” “Many public port authorities are run by local or state governments with small, fixed budgets and limited discretionary spending,” the letter said. “Yet CBP has presented them with bills that often total hundreds of thousands of dollars, and in some cases, exceed $1 million.”It said CBP threatens to slow walk inspections or reduce local staff if the bills are not paid. The CBP Space Act would, if passed, directly prohibit the agency from asking ports to fund “administrative, training, or recreation facilities” at a port of entry. The bill would also require the CBP to provide an annual report to Congress on how the agency is spending the merchandise processing fee and require CBP to work with the Treasury Department on setting a fee that would cover capital costs for local facilities.Carlos Buqueras, the executive director of SeaPort Manatee along Florida’s Gulf Coast, said in the letter that it’s Congress’ responsibility to adequately fund CBP’s mission and that the legislation “puts Congress’ long-held directives into law … [and] allows CBP officers to restore their full focus to the nation’s economy and security.”Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

US ports and shippers are asking Congress to rein in the costs of customs inspections at local ports of entry, throwing their support behind legislation that would require processing fees to cover expenses related to inspection facilities. In a letter sent last week to six of the bill’s original co-sponsors in the House of Representatives, the American Association of Port Authorities (AAPA) and 26 other groups asked for renewed support of the Customs and Border Protection (CBP) Space Act (Securing Ports and America’s Commerce and Economy). First introduced last year, two of the original co-sponsors, Florida Rep. Laurel Lee and Washington Rep. Marie Gluesenkamp, plan to bring the bill before Congress again this term. The CBP Space Act would require that the merchandise processing fee, which is based on the value of goods imported and can range between $32 and $634, would also cover any capital costs for inspection and other facilities for US customs officers at ports of entry. The fee currently just covers the salaries and other expenses for maintaining officers in the field. The AAPA and other signatories said in the letter that local customs offices have been asking ports to pay for “carpeting, heated driveways, unused computers, TVs, office renovations, and other capital improvements unrelated to cargo and passenger inspections.” “Many public port authorities are run by local or state governments with small, fixed budgets and limited discretionary spending,” the letter said. “Yet CBP has presented them with bills that often total hundreds of thousands of dollars, and in some cases, exceed $1 million.” It said CBP threatens to slow walk inspections or reduce local staff if the bills are not paid. The CBP Space Act would, if passed, directly prohibit the agency from asking ports to fund “administrative, training, or recreation facilities” at a port of entry. The bill would also require the CBP to provide an annual report to Congress on how the agency is spending the merchandise processing fee and require CBP to work with the Treasury Department on setting a fee that would cover capital costs for local facilities. Carlos Buqueras, the executive director of SeaPort Manatee along Florida’s Gulf Coast, said in the letter that it’s Congress’ responsibility to adequately fund CBP’s mission and that the legislation “puts Congress’ long-held directives into law … [and] allows CBP officers to restore their full focus to the nation’s economy and security.” Contact Michael Angell at michael.angell@spglobal.com .

North American ports

Transport, Trade and Regulation News

Ports ask Congress to help shift the costs of operating local customs offices

<div class="phx-topic abstract-wrapper">Some customers and competitors were surprised by the timing of the surcharges, which are typically implemented in August or September, if at all, and only after volume spikes.</div>

Some customers and competitors were surprised by the timing of the surcharges, which are typically implemented in August or September, if at all, and only after volume spikes.

<div class="phx-topic">J.B. Hunt Transport Services is defending its decision to impose surcharges of up to $1,500 per container on some shippers moving goods from Southern California, saying the fees are necessary to maintain service levels during an unpredictable peak season. <a href="https://www.joc.com/article/jb-hunt-hits-some-shippers-with-big-surcharges-in-southern-california-6043454">The surcharges</a>, which apply to certain retail, appliance and electronics shippers, are intended to ensure J.B. Hunt has the equipment and personnel in place if demand increases ahead of the holiday season, the company said during its quarterly earnings call late Tuesday. The surcharges are a tool, in a way, for J.B. Hunt to regulate how much unplanned freight it accepts during the busiest weeks of the year, ensuring there are enough drivers and containers to haul shipments for all its customers in Southern California. The surcharges went into effect July 13. “The last thing our industry can do is fail this shipping community at a time when the demand upticks,” Darren Field, president of J.B. Hunt’s intermodal division, said on the earnings call. “We have a handful of customers that said, ‘Hey, I might have extra business in July.’ We had many customers say, ‘I’m going to have the same peak I had last year’ ... and we just wanted a plan so we’re not caught by surprise.” <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="69b9e75c-ee79-4b00-9c29-ef0bc47d2af2"></dynamic-object></div>Meanwhile, maintaining strong service is important as J.B. Hunt and rail partner BNSF Railway performed above average in the second quarter, according to indicators. BNSF’s average Z-score, a proprietary Journal of Commerce calculation factoring train speeds, trains being held and idle laden railcars, has been positive for 13 consecutive weeks based on data filed with the US Surface Transportation Board (STB). Positive Z-scores indicate the railroad is outperforming its own history, while negative scores indicate underperformance. J.B. Hunt was also named the best intermodal provider by 41.5% of shippers in the latest Journal of Commerce Intermodal Service Scorecard, the highest percentage among its peers. The survey of more than 240 shippers was conducted between May 1 and June 30. The company regularly topped <a href="https://www.joc.com/resources/special-reports/domestic-intermodal-service-scorecard">prior surveys</a> as well, including in categories such as equipment availability, on-time pickups and on-time deliveries. Executing service becomes harder when week-over-week volumes become volatile. “This added complexity, lack of accurate forecast and potential for volatility, is why our peak season surcharge programs are starting earlier this year,” Spencer Frazier, executive vice president of sales for J.B. Hunt, said on the call. “Regardless of customer strategy and the shape of peak season, we will be ready to meet their demand when it occurs.” <h3>Some customers will look to skirt the charges </h3>Some J.B. Hunt customers and competitors were surprised by the timing of the surcharges. Peak season surcharges (PSSs) are typically implemented in August or September, if at all, and only after volume spikes. BNSF hauled more than 18,000 ocean containers during the week ending July 13, the highest since late January, according to data platform RailState. However, the railroad only hauled about 12,000 domestic containers during the same week, on par with its rolling 26-week average covering the first half of the year. J.B. Hunt implemented the surcharges after discussions with shippers over the last three weeks, customers told the Journal of Commerce. The fees apply only when a shipper out of Southern California exceeds its weekly contracted allotment, but the added costs can be substantial. “At $1,500 extra, our [competing] truckload rates become far cheaper,” said one J.B. Hunt customer who did not want to be identified. “That’s the trifecta of bad: higher rates, slower transit, and increased risk of theft.” Customers have also questioned whether J.B. Hunt incurs $1,500 in costs to reposition equipment to Southern California, or whether the surcharge reflects an attempt by J.B. Hunt to compensate for what it could not obtain during earlier contract negotiations. A second J.B. Hunt customer said they would take steps to avoid the fees. “We will look for opportunities not to pay the $1,500. That’s the short answer,” the source said. “We feel really confident that we’ll be successful.” Shippers said there are multiple ways to sidestep the charges, especially when only a few containers exceed weekly contractual limits. Some may shift overflow freight to J.B. Hunt’s competitors, both asset-based and non-asset-based intermodal providers. Others may opt for truckload carriers on the spot market, particularly as trucking rates remain low. Still others may delay non-urgent cargo by a few days, taking advantage of the weekly reset on allotments. It is not yet clear whether J.B. Hunt’s rivals will follow suit on the surcharges. While most major intermodal providers imposed PSSs last year, none set rates above $1,000 per container, except J.B. Hunt. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

J.B. Hunt Transport Services is defending its decision to impose surcharges of up to $1,500 per container on some shippers moving goods from Southern California, saying the fees are necessary to maintain service levels during an unpredictable peak season. The surcharges , which apply to certain retail, appliance and electronics shippers, are intended to ensure J.B. Hunt has the equipment and personnel in place if demand increases ahead of the holiday season, the company said during its quarterly earnings call late Tuesday. The surcharges are a tool, in a way, for J.B. Hunt to regulate how much unplanned freight it accepts during the busiest weeks of the year, ensuring there are enough drivers and containers to haul shipments for all its customers in Southern California. The surcharges went into effect July 13. “The last thing our industry can do is fail this shipping community at a time when the demand upticks,” Darren Field, president of J.B. Hunt’s intermodal division, said on the earnings call. “We have a handful of customers that said, ‘Hey, I might have extra business in July.’ We had many customers say, ‘I’m going to have the same peak I had last year’ ... and we just wanted a plan so we’re not caught by surprise.” Meanwhile, maintaining strong service is important as J.B. Hunt and rail partner BNSF Railway performed above average in the second quarter, according to indicators. BNSF’s average Z-score, a proprietary Journal of Commerce calculation factoring train speeds, trains being held and idle laden railcars, has been positive for 13 consecutive weeks based on data filed with the US Surface Transportation Board (STB). Positive Z-scores indicate the railroad is outperforming its own history, while negative scores indicate underperformance. J.B. Hunt was also named the best intermodal provider by 41.5% of shippers in the latest Journal of Commerce Intermodal Service Scorecard, the highest percentage among its peers. The survey of more than 240 shippers was conducted between May 1 and June 30. The company regularly topped prior surveys as well, including in categories such as equipment availability, on-time pickups and on-time deliveries. Executing service becomes harder when week-over-week volumes become volatile. “This added complexity, lack of accurate forecast and potential for volatility, is why our peak season surcharge programs are starting earlier this year,” Spencer Frazier, executive vice president of sales for J.B. Hunt, said on the call. “Regardless of customer strategy and the shape of peak season, we will be ready to meet their demand when it occurs.” Some customers will look to skirt the charges Some J.B. Hunt customers and competitors were surprised by the timing of the surcharges. Peak season surcharges (PSSs) are typically implemented in August or September, if at all, and only after volume spikes. BNSF hauled more than 18,000 ocean containers during the week ending July 13, the highest since late January, according to data platform RailState. However, the railroad only hauled about 12,000 domestic containers during the same week, on par with its rolling 26-week average covering the first half of the year. J.B. Hunt implemented the surcharges after discussions with shippers over the last three weeks, customers told the Journal of Commerce. The fees apply only when a shipper out of Southern California exceeds its weekly contracted allotment, but the added costs can be substantial. “At $1,500 extra, our [competing] truckload rates become far cheaper,” said one J.B. Hunt customer who did not want to be identified. “That’s the trifecta of bad: higher rates, slower transit, and increased risk of theft.” Customers have also questioned whether J.B. Hunt incurs $1,500 in costs to reposition equipment to Southern California, or whether the surcharge reflects an attempt by J.B. Hunt to compensate for what it could not obtain during earlier contract negotiations. A second J.B. Hunt customer said they would take steps to avoid the fees. “We will look for opportunities not to pay the $1,500. That’s the short answer,” the source said. “We feel really confident that we’ll be successful.” Shippers said there are multiple ways to sidestep the charges, especially when only a few containers exceed weekly contractual limits. Some may shift overflow freight to J.B. Hunt’s competitors, both asset-based and non-asset-based intermodal providers. Others may opt for truckload carriers on the spot market, particularly as trucking rates remain low. Still others may delay non-urgent cargo by a few days, taking advantage of the weekly reset on allotments. It is not yet clear whether J.B. Hunt’s rivals will follow suit on the surcharges. While most major intermodal providers imposed PSSs last year, none set rates above $1,000 per container, except J.B. Hunt. Contact Ari Ashe at ari.ashe@spglobal.com .

Rail News

North-American rail

Intermodal providers

J.B. Hunt says surcharges necessary to maintain peak season service

<div class="phx-topic abstract-wrapper">With more ships expected to divert to the longer Cape of Good Hope route around southern Africa, shippers could find it more difficult to secure capacity for project cargoes. </div>

With more ships expected to divert to the longer Cape of Good Hope route around southern Africa, shippers could find it more difficult to secure capacity for project cargoes.

<div class="phx-topic">Multipurpose vessel (MPV) availability could tighten globally in the near term due to a whole-fleet shift away from the Red Sea, just as breakbulk and project cargo demand ramps up. <a href="https://www.joc.com/article/new-houthi-attacks-likely-kill-hopes-of-shipping-returning-to-red-sea-this-year-6040923">Last week’s attacks</a> of the Liberian-flagged, Greek-owned Magic Sea and the Greek-operated, Liberia-flagged Eternity C by Houthis in the Red Sea are expected to prompt MPV operators that were still sailing through the Red Sea to re-evaluate the safety of the route. Kyriacos Panayides, CEO of MPV ship operator AAL Shipping, said that after the most recent attacks, more “non-western operators” are now considering the Cape of Good Hope route around southern Africa. “The Red Sea passage vessels on radar have reduced dramatically since last week, down to only ... [about] 30 vessels per day,” he told the Journal of Commerce. Market experts said the ship diversions could artificially reduce the number of MPVs available for breakbulk and project cargo loads in the short term as the entire fleet shifts to the longer Cape route. It could also reduce the impact of the two-tier MPV market that has developed over the past two years, where operators not targeted by Houthis continued to sail via the Red Sea, offering cheaper freight rates than MPV operators sailing via the Cape. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="1e7f3686-4313-47cb-9fe9-d40ac8e832e6"></dynamic-object></div>The longer sailing times for all shippers come on the back of a surge of cargo activity in the second quarter, where shippers withheld cargoes rushed to move orders before a reprieve for US tariffs expired, according to Ritesh Nair, head of projects at project cargo forwarder Rhenus Projects Logistics. The 90-day tariff reprieve for the majority of countries announced by the US was due to end on July 9. However, the Trump administration decided to delay its deadline for implementing reciprocal tariffs to Aug. 1. “We expect Q3/Q4 to be steady and then to pick up from Q2 2026,” Nair told the Journal of Commerce. “Vessel operators are hesitating taking vessels on time charter and cargo flows are shifting a bit, making the whole market super volatile and unsecure.” Nair added that it is “difficult to budget” in the current breakbulk and project cargo market. <h3>Misinformation, uncertainty are rife </h3>Nair also spoke of misinformation circling on risk mitigation strategies related to the US trade uncertainty. Giving the example of Free Trade Zones and bonded warehouses, he said that clients were confused about the benefits of each. “FTZs allow you to defer duties, but with bonded warehouses you can hedge against a future duty rate,” he said. “How willing is a customer or their finance team to hedge?” He added that space is drying up on bonded warehouses. In its July report, Toepfer Transport spoke of a “stagnation” in MPV charter rates, although acknowledged that the opportunity to achieve or outperform the index rate depends heavily on the trade region. On the demand side, Toepfer said some carriers have reported good utilization of tonnage, except in the trans-Atlantic trades. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="ea382181-08cd-4298-912f-87c79836bcf7"></dynamic-object></div>The Toepfer Multipurpose Index (TMI) slipped 1% to $12,895 in June, although it is up 1.81% year over year. Toepfer’s TMI is based on expected average rates for six- to 12-month time charters for 12,500-deadweight-ton (dwt) “F-Type” vessels with safe working loads of 240-360 metric tons, as reported to Toepfer by owners and operators. Toepfer did concede that some of the positive sentiment in the charter market was related to fixtures of F500 types, mainly newbuildings that are still to be delivered. Drewry’s General Cargo Index also dropped slightly month over month in June, down 0.7% to 137, while its Project Cargo Transport Index slipped 0.5% to 169 over the same period. The base point for both indexes is 100 starting in January 2019, meaning that the calculations begin from that point onward. Contact Carly Fields at <a href="mailto:carly.fields@spglobal.com">carly.fields@spglobal.com</a>. </div>

Multipurpose vessel (MPV) availability could tighten globally in the near term due to a whole-fleet shift away from the Red Sea, just as breakbulk and project cargo demand ramps up. Last week’s attacks of the Liberian-flagged, Greek-owned Magic Sea and the Greek-operated, Liberia-flagged Eternity C by Houthis in the Red Sea are expected to prompt MPV operators that were still sailing through the Red Sea to re-evaluate the safety of the route. Kyriacos Panayides, CEO of MPV ship operator AAL Shipping, said that after the most recent attacks, more “non-western operators” are now considering the Cape of Good Hope route around southern Africa. “The Red Sea passage vessels on radar have reduced dramatically since last week, down to only ... [about] 30 vessels per day,” he told the Journal of Commerce. Market experts said the ship diversions could artificially reduce the number of MPVs available for breakbulk and project cargo loads in the short term as the entire fleet shifts to the longer Cape route. It could also reduce the impact of the two-tier MPV market that has developed over the past two years, where operators not targeted by Houthis continued to sail via the Red Sea, offering cheaper freight rates than MPV operators sailing via the Cape. The longer sailing times for all shippers come on the back of a surge of cargo activity in the second quarter, where shippers withheld cargoes rushed to move orders before a reprieve for US tariffs expired, according to Ritesh Nair, head of projects at project cargo forwarder Rhenus Projects Logistics. The 90-day tariff reprieve for the majority of countries announced by the US was due to end on July 9. However, the Trump administration decided to delay its deadline for implementing reciprocal tariffs to Aug. 1. “We expect Q3/Q4 to be steady and then to pick up from Q2 2026,” Nair told the Journal of Commerce. “Vessel operators are hesitating taking vessels on time charter and cargo flows are shifting a bit, making the whole market super volatile and unsecure.” Nair added that it is “difficult to budget” in the current breakbulk and project cargo market. Misinformation, uncertainty are rife Nair also spoke of misinformation circling on risk mitigation strategies related to the US trade uncertainty. Giving the example of Free Trade Zones and bonded warehouses, he said that clients were confused about the benefits of each. “FTZs allow you to defer duties, but with bonded warehouses you can hedge against a future duty rate,” he said. “How willing is a customer or their finance team to hedge?” He added that space is drying up on bonded warehouses. In its July report, Toepfer Transport spoke of a “stagnation” in MPV charter rates, although acknowledged that the opportunity to achieve or outperform the index rate depends heavily on the trade region. On the demand side, Toepfer said some carriers have reported good utilization of tonnage, except in the trans-Atlantic trades. The Toepfer Multipurpose Index (TMI) slipped 1% to $12,895 in June, although it is up 1.81% year over year. Toepfer’s TMI is based on expected average rates for six- to 12-month time charters for 12,500-deadweight-ton (dwt) “F-Type” vessels with safe working loads of 240-360 metric tons, as reported to Toepfer by owners and operators. Toepfer did concede that some of the positive sentiment in the charter market was related to fixtures of F500 types, mainly newbuildings that are still to be delivered. Drewry’s General Cargo Index also dropped slightly month over month in June, down 0.7% to 137, while its Project Cargo Transport Index slipped 0.5% to 169 over the same period. The base point for both indexes is 100 starting in January 2019, meaning that the calculations begin from that point onward. Contact Carly Fields at carly.fields@spglobal.com .

Breakbulk News

Asia-Europe

Project cargo

MPV availability likely to tighten in aftermath of latest Houthi attacks

<div class="phx-topic abstract-wrapper">The European automotive industry has been hammered by Washington’s import tariffs that are imposing a significant financial burden on the continent’s carmakers. </div>

The European automotive industry has been hammered by Washington’s import tariffs that are imposing a significant financial burden on the continent’s carmakers.

<div class="phx-topic">The financial cost of US tariffs on the European automotive industry has been illustrated by Volvo Group, which was forced to take a $1.2 billion impairment charge in the second quarter as tariffs undermined profitability. With President Donald Trump’s threat at the weekend to impose 30% tariffs on all European Union imports from Aug. 1, there is no letting up on the financial pressure facing the automotive industry. “Due to import tariffs the company is currently unable to sell the Volvo ES90 profitably in the United States, while ES90 margins are also under pressure in Europe for the same reason,” Volvo told investors in a statement Monday. The Swedish carmaker said the $1.2 billion write-down reflected adjustments in expected production volumes of its two latest electric car models following the tariffs and “rightsizing the assets to the known market realities.” An impairment charge is the writing down of the value of an asset to reflect its reduced worth. The US imposed 25% tariffs on the steel and aluminum sectors in March and expanded that to include automobiles on April 3 and automobile parts on May 3, also set at 25%, up from 2.5%. Then, last Saturday, Trump, frustrated at a perceived lack of progress on trade negotiations, threatened to impose 30% tariffs on all imports from the EU from Aug. 1. The US is the largest market for Europe’s automotive industry, comprising 23% of the EU’s total car exports, according to data from the European Commission. With such a significant market share, auto exports from the port of Antwerp-Bruges, a huge automotive hub in Europe that handled more than three million vehicles last year, have been particularly hard hit by the US tariffs. There has been “a clear decline” in vehicle exports to the US via Antwerp since May as tariffs dragged down the numbers, the port noted in a statement this week <a href="https://www.joc.com/article/strong-h1-volumes-space-crunch-keep-antwerp-terminals-under-pressure-6043917">on its first-half operations</a>. In the first six months of the year, 15.9% fewer new cars and vans (76,089 units) and 31.5% fewer trucks and heavy vehicles (11,751 units) were exported. <h3>Eurozone pushed to ‘edge of recession’ </h3>The US tariffs will do no favors for Europe’s economies. Research consultancy Oxford Economics noted in a report this week that the threat of 30% tariffs was an escalation of the trade war that will push the eurozone economy to the edge of recession, with growth stagnating over the coming quarters. “Using our global economic model, we estimate that this could cut eurozone GDP growth by up to 0.3 percentage point annually over the next two years,” the report said. The 30% tariff threat surprised EU officials who reportedly thought they were close to a preliminary agreement with the US. Brussels has subsequently dusted off plans to impose its own targeted retaliatory measures on US products should the tariffs be implemented, but it is still holding trade talks with Washington. “The latest decision to delay its planned retaliatory measures until next month shows the EU still hopes to reach a deal before the Aug. 1 deadline,” the Oxford Economics report noted. Oxford Economics found US tariffs were also raising uncertainty and damaging business confidence in the EU, and by extension corporate investment, a sentiment that was picked up in the latest S&amp;P Global Germany Business Outlook survey. “Businesses report concerns about disruption to both demand and supply chains from increased US trade tariffs and the wars in Ukraine and the Middle East, with the related uncertainty expected to limit business investment and growth,” Phil Smith, economics associate director at S&amp;P Global Market Intelligence, said in his analysis of the survey results. “The current geopolitical backdrop means that firms overall remain only cautiously optimistic about the outlook and are by no means fully loosening the purse strings, with growth forecasts and investment intentions still running below their respective pre-pandemic averages,” Smith added. S&amp;P Global is the parent company of the Journal of Commerce. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The financial cost of US tariffs on the European automotive industry has been illustrated by Volvo Group, which was forced to take a $1.2 billion impairment charge in the second quarter as tariffs undermined profitability. With President Donald Trump’s threat at the weekend to impose 30% tariffs on all European Union imports from Aug. 1, there is no letting up on the financial pressure facing the automotive industry. “Due to import tariffs the company is currently unable to sell the Volvo ES90 profitably in the United States, while ES90 margins are also under pressure in Europe for the same reason,” Volvo told investors in a statement Monday. The Swedish carmaker said the $1.2 billion write-down reflected adjustments in expected production volumes of its two latest electric car models following the tariffs and “rightsizing the assets to the known market realities.” An impairment charge is the writing down of the value of an asset to reflect its reduced worth. The US imposed 25% tariffs on the steel and aluminum sectors in March and expanded that to include automobiles on April 3 and automobile parts on May 3, also set at 25%, up from 2.5%. Then, last Saturday, Trump, frustrated at a perceived lack of progress on trade negotiations, threatened to impose 30% tariffs on all imports from the EU from Aug. 1. The US is the largest market for Europe’s automotive industry, comprising 23% of the EU’s total car exports, according to data from the European Commission. With such a significant market share, auto exports from the port of Antwerp-Bruges, a huge automotive hub in Europe that handled more than three million vehicles last year, have been particularly hard hit by the US tariffs. There has been “a clear decline” in vehicle exports to the US via Antwerp since May as tariffs dragged down the numbers, the port noted in a statement this week on its first-half operations . In the first six months of the year, 15.9% fewer new cars and vans (76,089 units) and 31.5% fewer trucks and heavy vehicles (11,751 units) were exported. Eurozone pushed to ‘edge of recession’ The US tariffs will do no favors for Europe’s economies. Research consultancy Oxford Economics noted in a report this week that the threat of 30% tariffs was an escalation of the trade war that will push the eurozone economy to the edge of recession, with growth stagnating over the coming quarters. “Using our global economic model, we estimate that this could cut eurozone GDP growth by up to 0.3 percentage point annually over the next two years,” the report said. The 30% tariff threat surprised EU officials who reportedly thought they were close to a preliminary agreement with the US. Brussels has subsequently dusted off plans to impose its own targeted retaliatory measures on US products should the tariffs be implemented, but it is still holding trade talks with Washington. “The latest decision to delay its planned retaliatory measures until next month shows the EU still hopes to reach a deal before the Aug. 1 deadline,” the Oxford Economics report noted. Oxford Economics found US tariffs were also raising uncertainty and damaging business confidence in the EU, and by extension corporate investment, a sentiment that was picked up in the latest S&P Global Germany Business Outlook survey. “Businesses report concerns about disruption to both demand and supply chains from increased US trade tariffs and the wars in Ukraine and the Middle East, with the related uncertainty expected to limit business investment and growth,” Phil Smith, economics associate director at S&P Global Market Intelligence, said in his analysis of the survey results. “The current geopolitical backdrop means that firms overall remain only cautiously optimistic about the outlook and are by no means fully loosening the purse strings, with growth forecasts and investment intentions still running below their respective pre-pandemic averages,” Smith added. S&P Global is the parent company of the Journal of Commerce. Contact Greg Knowler at greg.knowler@spglobal.com .

Ro/ro cargo

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Volvo faces $1.2 billion write-down as US tariffs erode profitability

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The world of LTL is slow to embrace change. Business anachronisms permeate current supply chain processes. These vestiges of the way things used to work define the LTL freight transportation procurement process of many modern shippers.David Knuth, logistics specialist at IEWC, a global supplier of cable and wire based in Wisconsin, is happy to have modernized the RFP process, automating the entire LTL bidding procedure with Bid$ense, SMC³’s automated truckload and LTL freight transportation sourcing solution. But when prompted, he can still recall what once was.In his previous job, a large part of his duties were consumed by creating an intermodal bid package for carriers. In a spreadsheet, Knuth detailed the company’s volumes lane by lane, taking care to delete any errant keystrokes or misleading data. He would then email out the information to each carrier, taking time to respond to detailed technical questions about the spreadsheet data. Finally, he had to compile all the results, create an algorithm that would compare the carriers on each lane, and award the business.“It was a huge undertaking. It took about four months to do,” Knuth said of the old process. “It was almost a full-time job for that part of the year, every year.”In his new job at IEWC, he sat down with Bid$ense on day one and was amazed at the capabilities. Knuth had never before used a bid tool. SMC³’s latest versions of Bid$ense automate the process even further, taking truckload and LTL RFPs entirely online. The tool draws on RFP best-practices protocols to streamline the bidding communication process, enabling bidding carriers to respond accurately and promptly to shipper requests. The solution also does all the distribution work automatically, electronically submitting shipper bid data to carriers based on their actual service capabilities and performance records. Carriers are alerted with timely prompts for RFP deliverables, so shippers aren’t waiting by the phone for responses.Another benefit of automating the process is the data-cleansing assistance. When Knuth sent spreadsheets to carriers, data errors might cloud the bidding process; he might have to resend data or simply accept a price that did not truly reflect the costs of doing business. Data cleansing is incredibly beneficial, he said.The spreadsheet technique also made bidding analysis an onerous task. Since Bid$ense automates and streamlines the entire RFP process, intensive examination is now simple. SMC³ knows that each bid has more than one best outcome. With uniform responses from each carrier, shippers can quickly rank results and create an unlimited quantity of what-if scenarios to make the optimal procurement decision.Jesse Burnett of Central Garden &amp; Pet experiences many of the same benefits. Founded in 1980, Central Garden &amp; Pet has spent the last three decades growing from a small garden supply company to a provider of a range of products from dog chews and bird seed to soil supplements and natural insecticides. For much of its life, the company shipped these disparate goods via LTL and truckload carriers to retailers throughout the country, relying on each business unit to negotiate directly with their freight transportation providers. This arrangement worked fairly well for a small company, but as Central Garden &amp; Pet expanded, leadership decided to consolidate decision making.Burnett helped centralize the transportation decision making in 2015 with SMC³’s Bid$ense. Before Bid$ense, every business unit operated independently as far as negotiating with carriers.“There were a lot of different things just floating around,” he said. “We didn’t have master agreements in place; no national pricing at all. The pricing from carriers was just all over the place, depending on where you were.”The transformations he saw with Bid$ense were immediate. Burnett has been using the tool about every other year since its implementation at the company. Central Garden and Pet’s $19.6 million 2019 LTL bid saved the company just more than 9 percent when compared to its historical average. For Burnett, though, bid automation extends far beyond savings.“We knew that we weren’t getting the best pricing offer from our carriers just because nothing was centralized,” he continued. “We knew that if we combined everything from all these business units and paired it with one corporate offering, then it would drive some cost benefit with it.”When the company initially decided to centralize bid procurement, executives researched a number of different methodologies and technologies. In the end, though, Burnett found that Bid$ense was both widespread and well known, and that his carrier partners already knew how to use the application. Burnett also highlighted the data-cleansing process as a major benefit, saying the rigorous process ensures that carriers always return the best price.“It definitely has helped drive savings,” he said. “Any time you go out there and you drive that competitiveness with the carriers and they know they’re in a bid environment, it seems to sharpen their pencils.”Transportation procurement is an integral part of the modern supply chain. With Bid$ense, shippers can develop a strategic implementation plan that saves them time and money, but also helps them create strong relationships with their carrier partners. These carriers appreciate the solution’s data-cleansing process; when carriers receive a complete shipment history and future volume forecast, they don’t have to guess on pricing. Carriers that receive more data from shippers get a complete picture of that shipper’s freight, allowing them to accurately plan instead of simply preparing for the worst-case scenario. Clean data presented through an automated system can lead to both bigger shipment savings and a lasting partnership between carrier and customer.Whether customers are looking to streamline over-the-road transportation bidding by automating the RFP process or create an entirely new, centralized sourcing process, Bid$ense has the analytical horsepower to get the job done.SMC³ 2020 Customer Case Study

SMC3rates_shutterstock_5247046.jpg

Shippers save money, time with automated transportation bidding tools

If there’s one immutable truth in the world of logistics, it’s this: LTL is an inherently complex form of transportation. Tariffs, rates, DIM weights, transit times — it’s enough to confuse even seasoned logistics professionals. The solution to this knowledge gap has historically been on-the-job training or university supply chain education, but for a variety of reasons there is now a pressing need for third-party, remote LTL training that prepares logistics workers for transportation success. Global Scope Can Overlook Local Intricacies In the past, professionals looking to move into a supply chain career learned about the basics of supply chain from universities. However, many of these college supply chain programs are now global in scope, focusing on worldwide supply chain management instead of the intricacies of specialized domestic transportation. And even these programs, which used to be widespread, are becoming less common. LTL is not an industry of broad-brush strokes; supply chain professionals really need a pointillistic understanding of the logistics of LTL in order to excel in the industry. Accelerating Need for Dedicated LTL Education This lack of specified training put the onus on employers to prepare new hires with the LTL knowledge needed to do their jobs. Dedicated LTL study is a necessity, not a luxury. At the same time, changes in LTL and the broader supply chain world are accelerating. The reliance on e-commerce has ballooned since the start of the pandemic, and last-mile LTL shipments and related e-commerce strains on the supply chain won’t diminish once social distancing abates. That genie isn’t going back into the bottle. So supply chain employers need logistics workers that are fully versed in all aspects of the industry, ready to solve unique shipping and delivery problems based on their extensive supply chain knowledge But why care about LTL? It’s been reported that some shippers in today’s world are no longer concerned with what mode is used to ship their goods. A Multimodal Approach Ensures On-Time Delivery This mode agnosticism means supply chain stakeholders have to be well versed in all modes of transportation. As unforeseen weather events and other disruptions, such as protests, become more common, savvy logistics employees will need to be armed with familiarity of all modes, not just the most popular, to ensure that freight is delivered on time, without damage, and in the most financially expedient way possible. Offerings like SMC³’s LTL online education courses cover a wide range of topics from LTL basics and operations to more advanced concepts like pricing analytics and transportation law. The company also has plans to continually refresh content, adding new expert presenters and taking the feedback of students to make the courses even better as time goes on. Learn more about&nbsp;<a href="https://logisticstrainingcenter.com/smc3-courses/" rel="noreferrer" class="joc_admin__link">SMC³’s LTL Online Education program</a>&nbsp;and view the 2021 hybrid schedule, featuring live industry experts,&nbsp;<a href="https://www.smc3.com/onlinelearning2021/" rel="noreferrer" class="joc_admin__link">here.</a>

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Filling the Supply Chain Education Gap with LTL Education Courses

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