<div class="phx-topic abstract-wrapper">Carriers are in a precarious financial position, facing a cash flow crisis amid weak volume and huge capacity cuts, and no clarity on when demand will return.</div>

Carriers are in a precarious financial position, facing a cash flow crisis amid weak volume and huge capacity cuts, and no clarity on when demand will return.

3633086_FI.jpg

<div class="phx-topic">A deteriorating global economic outlook as major markets struggle to limit the impact of the coronavirus disease 2019 (COVID-19) is threatening to prolong the financial pain being felt by carriers that have been forced to make extensive capacity cuts in a bid to match rapidly declining demand.Economists at JOC.com parent company IHS Markit released a bleak new assessment this week, predicting the US economy will not emerge from negative GDP growth until at least the fourth quarter, and that in Europe, a severe recession is now unavoidable. The International Monetary Fund (IMF) said in its April revision that, “As a result of the pandemic, the global economy is projected to contract sharply by minus 3 percent in 2020, much worse than during the 2008-09 financial crisis.” Peter Sand, chief shipping analyst at BIMCO, said in a webinar hosted by the shipping association this week that every economic forecast made in the last six months has moved from plus to minus. “The IMF is clear that this is way worse than the global financial crisis of 2009 when GDP growth was minus 0.1 percent,” Sand said. “Our expectations in 2020 are for negative growth of 2-3 percent.” Carriers have reacted to these gloomy forecasts by announcing plans to increase capacity withdrawals over the next few weeks that will result in 20 percent of the trans-Pacific capacity being taken out of service, while the Asia-Europe trades will see cumulative capacity cuts reaching 25 to 30 percent, according to Sea-Intelligence Maritime Consulting. In its latest Sunday Spotlight newsletter, the analyst said the capacity withdrawals will result in a volume loss of 6.4 million TEU by the end of June.<h2>Carriers on the edge</h2>The cash flow loss from such a significant decline in volumes is hurting carriers that were already in a precarious financial position even before the coronavirus became a global issue. In a survey of the container shipping companies’ Altman Z-scores as of the end of 2019, Alphaliner found that seven out of the 11 carriers recorded Z-scores of less than 1.3, indicating a “very high” likelihood of insolvency within the next two years. Carriers with elevated leverage ratios were especially vulnerable, Alphaliner noted, in particular those with high levels of short-term debt that was due this year. Of the 11 carriers surveyed, six had negative working capital — meaning current liabilities exceeding current assets — including CMA CGM, Hapag-Lloyd, HMM, PIL, Yang Ming, and Zim. Carriers with poor track records of negative earnings were also at risk, with three carriers’ Z-scores lowered due to their negative retained earnings (HMM, Yang Ming, and Zim). As the coronavirus impact on demand worsens across international supply chains, Moody’s Investor Service on March 31 <a href="https://www.joc.com/maritime-news/high-debt-levels-leave-container-lines-exposed_20200406.html">changed its ratings outlook</a> on Hapag-Lloyd and Maersk Line from “stable” to “negative.” The ratings agency also announced plans to review the current negative rating of CMA CGM, saying in an April 1 announcement that the carrier’s capital structure was too weak for it to maintain its current high credit risk rating of B2.Despite the high debt levels and the potential for insolvencies in container shipping, Alan Murphy, CEO of Sea-Intelligence, was not convinced that <a href="https://www.joc.com/special-topics/hanjin-shipping-bankruptcy">another Hanjin</a> would be allowed to happen. “In the last 30 years, only Hanjin went bankrupt, and everyone will move very far to avoid another Hanjin,” Murphy said on the BIMCO webinar. “But if we see a 10 percent volume drop and freight rate decline as was recorded in 2009, we will see operating profits of the last eight years being wiped out. The industry simply cannot work with that. It is not possible, and if that happens, there will need to be some kind of subsidy for the industry to avoid another Hanjin, because that will cost so much more than trying to save a failing carrier.”Contact Greg Knowler at <a href="mailto:greg.knowler@ihsmarkit.com">greg.knowler@ihsmarkit.com </a>and follow him on Twitter: <a href="https://twitter.com/greg_knowler">@greg_knowler</a>.</div>

A deteriorating global economic outlook as major markets struggle to limit the impact of the coronavirus disease 2019 (COVID-19) is threatening to prolong the financial pain being felt by carriers that have been forced to make extensive capacity cuts in a bid to match rapidly declining demand. Economists at JOC.com parent company IHS Markit released a bleak new assessment this week, predicting the US economy will not emerge from negative GDP growth until at least the fourth quarter, and that in Europe, a severe recession is now unavoidable. The International Monetary Fund (IMF) said in its April revision that, “As a result of the pandemic, the global economy is projected to contract sharply by minus 3 percent in 2020, much worse than during the 2008-09 financial crisis.” Peter Sand, chief shipping analyst at BIMCO, said in a webinar hosted by the shipping association this week that every economic forecast made in the last six months has moved from plus to minus. “The IMF is clear that this is way worse than the global financial crisis of 2009 when GDP growth was minus 0.1 percent,” Sand said. “Our expectations in 2020 are for negative growth of 2-3 percent.” Carriers have reacted to these gloomy forecasts by announcing plans to increase capacity withdrawals over the next few weeks that will result in 20 percent of the trans-Pacific capacity being taken out of service, while the Asia-Europe trades will see cumulative capacity cuts reaching 25 to 30 percent, according to Sea-Intelligence Maritime Consulting. In its latest Sunday Spotlight newsletter, the analyst said the capacity withdrawals will result in a volume loss of 6.4 million TEU by the end of June. Carriers on the edge The cash flow loss from such a significant decline in volumes is hurting carriers that were already in a precarious financial position even before the coronavirus became a global issue. In a survey of the container shipping companies’ Altman Z-scores as of the end of 2019, Alphaliner found that seven out of the 11 carriers recorded Z-scores of less than 1.3, indicating a “very high” likelihood of insolvency within the next two years. Carriers with elevated leverage ratios were especially vulnerable, Alphaliner noted, in particular those with high levels of short-term debt that was due this year. Of the 11 carriers surveyed, six had negative working capital — meaning current liabilities exceeding current assets — including CMA CGM, Hapag-Lloyd, HMM, PIL, Yang Ming, and Zim. Carriers with poor track records of negative earnings were also at risk, with three carriers’ Z-scores lowered due to their negative retained earnings (HMM, Yang Ming, and Zim). As the coronavirus impact on demand worsens across international supply chains, Moody’s Investor Service on March 31 changed its ratings outlook on Hapag-Lloyd and Maersk Line from “stable” to “negative.” The ratings agency also announced plans to review the current negative rating of CMA CGM, saying in an April 1 announcement that the carrier’s capital structure was too weak for it to maintain its current high credit risk rating of B2. Despite the high debt levels and the potential for insolvencies in container shipping, Alan Murphy, CEO of Sea-Intelligence, was not convinced that another Hanjin would be allowed to happen. “In the last 30 years, only Hanjin went bankrupt, and everyone will move very far to avoid another Hanjin,” Murphy said on the BIMCO webinar. “But if we see a 10 percent volume drop and freight rate decline as was recorded in 2009, we will see operating profits of the last eight years being wiped out. The industry simply cannot work with that. It is not possible, and if that happens, there will need to be some kind of subsidy for the industry to avoid another Hanjin, because that will cost so much more than trying to save a failing carrier.” Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler .

Maritime

Grim economic outlook to extend suffering for carriers

<div class="phx-topic abstract-wrapper">J.B. Hunt lowered its peak season surcharge because of disappointing volume on the West Coast.</div>

J.B. Hunt lowered its peak season surcharge because of disappointing volume on the West Coast.

Feature image

<div class="phx-topic">J.B. Hunt Transport Services said demand for its intermodal business remained soft in the third quarter, particularly on the West Coast, where transcontinental container loads fell 6% from a year earlier, as total rail shipments declined 1% overall. In describing the overall freight market, the company remarked that “it’s no secret, the market hasn’t returned yet,” which has now surpassed three years. The nation’s largest domestic intermodal provider rolled out an early peak-season surcharge in July of $1,500 per container in Los Angeles, but the company <a href="https://www.joc.com/article/jb-hunt-reduces-peak-season-surcharge-on-southern-california-moves-6066323">later trimmed the fee to $800.</a> “We were disappointed in demand off the West Coast during the quarter and even adjusted our peak program in the middle of the quarter as an example,” said Darren Field, president of J.B. Hunt’s intermodal division. “Demand for our domestic intermodal service wasn’t all that strong.” Despite sluggish volume, executives said the peak season may not be finished because much of the cargo unloaded at West Coast ports this summer remains in local warehouses. “It is important to disconnect the timing of peak season on the water from peak season of the inland supply chain,” said Spencer Frazier, executive vice president of sales and marketing. “Our conversations indicate there is a large amount of freight that was imported early that hasn’t moved through the inland supply chain yet. No one has canceled Christmas.” There were some positive results despite the weaker third quarter in Southern California. Domestic intermodal operating income rose 12% year over year, contributing to an 8% increase in company-wide operating income. The company said aggressive cost controls shaved $20 million in costs during the quarter. <h3>East Coast intermodal doing better </h3>Local East Coast intermodal volume climbed 6% in the quarter, a signal that there is strength on containerized freight staying within the CSX Transportation and Norfolk Southern Railway networks. The carrier credited improved rail service for helping shift more truckload freight to rail in the region. The Journal of Commerce Intermodal Service Z-Score, a measurement of how a railroad performs against its own history on three key service metrics, showed CSX and NS operated at or above average through the second-to-last week of the quarter. The final week’s data is unavailable because the US Surface Transportation Board, which publishes the metrics, is affected by the federal government shutdown. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="128e25f2-064e-4956-afe3-0fe7d3c06552"></dynamic-object></div>Norfolk Southern CEO Mark George said Thursday at the Virginia Maritime Association conference that intermodal train speeds are up this year. “We’re delivering consistent service, trending about 90% on-time performance,” George said. “In fact, in September, we had a standout month, hitting 100% in intermodal plan compliance.” He added that international intermodal traffic has risen more than 3% year over year, while domestic volume has flatlined because of trade disruptions. The comments suggest either J.B. Hunt’s East Coast gains may be concentrated on the CSX network, or other Norfolk Southern domestic intermodal partners have struggled to sustain shipments. <h3>Not taking sides on UP-NS deal </h3>J.B. Hunt CEO Shelley Simpson addressed Union Pacific Railroad’s <a href="https://www.joc.com/article/major-rail-union-backs-up-ns-merger-after-job-protection-deal-6084510">proposed acquisition</a> of NS before US regulators, signaling that the company would neither endorse, nor oppose the transaction. “Our decades of experience, including navigating seven prior Class I railroad mergers and our thoughtfully developed long-term agreements and strong relationships with NS, CSX, and BNSF should provide the basis for us to accept any changes in the industry,” she said Wednesday. J.B. Hunt’s Field pushed back on speculation that a merger would force J.B. Hunt to shift all East Coast traffic to CSX. The assumption stems from the carrier’s long-standing partnership with BNSF Railway under the “Quantum Agreement,” a revenue-sharing arrangement formed more than 35 years ago which gives J.B. Hunt a pricing edge over competitors. It also launched a <a href="https://www.joc.com/article/j-b-hunt-bnsf-launch-new-intermodal-service-to-grab-time-sensitive-freight-5215574">Quantum service product</a> two years ago with a 95% on-time intermodal performance guarantee supported by J.B. Hunt staff embedded at BNSF’s headquarters in Texas. In recent months, BNSF and CSX have deepened their relationship, launching coast-to-coast intermodal routes linking Southern California <a href="https://www.joc.com/article/bnsf-csx-unveil-new-joint-intermodal-lanes-in-aftermath-of-up-ns-merger-6067789">with Charlotte and Jacksonville</a>. Other coast-to-coast routes to the Northeast <a href="https://www.joc.com/article/csx-restarts-baltimore-tunnel-service-for-double-stack-in-2026-6087384">may be announced next year</a> after CSX begins double-stack intermodal service through Baltimore next spring. This budding partnership has fueled speculation that J.B. Hunt could edge closer to CSX along with BNSF. Many West Coast rail contracts include exclusivity clauses preventing companies such as Hub Group or Schneider National from using BNSF in markets where UP also runs. J.B. Hunt’s BNSF deals carry similar restrictions, making it unlikely the carrier would be permitted to shift volume onto a merged UP–NS network in BNSF-served territories. Even so, J.B. Hunt could continue using a combined UP-NS network for freight to stay east of the Mississippi, where BNSF has no presence. “Any future merger that would be approved for whatever reason has been perceived that J.B. Hunt would have to move our traffic to CSX and that’s not accurate at all,” Field said. “There’s nothing about a future state new railroad that would mean our current Norfolk Southern footprint that we have today would be required to change.” Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. Senior Editor Eric Johnson contributed to this report. </div>

J.B. Hunt Transport Services said demand for its intermodal business remained soft in the third quarter, particularly on the West Coast, where transcontinental container loads fell 6% from a year earlier, as total rail shipments declined 1% overall. In describing the overall freight market, the company remarked that “it’s no secret, the market hasn’t returned yet,” which has now surpassed three years. The nation’s largest domestic intermodal provider rolled out an early peak-season surcharge in July of $1,500 per container in Los Angeles, but the company later trimmed the fee to $800. “We were disappointed in demand off the West Coast during the quarter and even adjusted our peak program in the middle of the quarter as an example,” said Darren Field, president of J.B. Hunt’s intermodal division. “Demand for our domestic intermodal service wasn’t all that strong.” Despite sluggish volume, executives said the peak season may not be finished because much of the cargo unloaded at West Coast ports this summer remains in local warehouses. “It is important to disconnect the timing of peak season on the water from peak season of the inland supply chain,” said Spencer Frazier, executive vice president of sales and marketing. “Our conversations indicate there is a large amount of freight that was imported early that hasn’t moved through the inland supply chain yet. No one has canceled Christmas.” There were some positive results despite the weaker third quarter in Southern California. Domestic intermodal operating income rose 12% year over year, contributing to an 8% increase in company-wide operating income. The company said aggressive cost controls shaved $20 million in costs during the quarter. East Coast intermodal doing better Local East Coast intermodal volume climbed 6% in the quarter, a signal that there is strength on containerized freight staying within the CSX Transportation and Norfolk Southern Railway networks. The carrier credited improved rail service for helping shift more truckload freight to rail in the region. The Journal of Commerce Intermodal Service Z-Score, a measurement of how a railroad performs against its own history on three key service metrics, showed CSX and NS operated at or above average through the second-to-last week of the quarter. The final week’s data is unavailable because the US Surface Transportation Board, which publishes the metrics, is affected by the federal government shutdown. Norfolk Southern CEO Mark George said Thursday at the Virginia Maritime Association conference that intermodal train speeds are up this year. “We’re delivering consistent service, trending about 90% on-time performance,” George said. “In fact, in September, we had a standout month, hitting 100% in intermodal plan compliance.” He added that international intermodal traffic has risen more than 3% year over year, while domestic volume has flatlined because of trade disruptions. The comments suggest either J.B. Hunt’s East Coast gains may be concentrated on the CSX network, or other Norfolk Southern domestic intermodal partners have struggled to sustain shipments. Not taking sides on UP-NS deal J.B. Hunt CEO Shelley Simpson addressed Union Pacific Railroad’s proposed acquisition of NS before US regulators, signaling that the company would neither endorse, nor oppose the transaction. “Our decades of experience, including navigating seven prior Class I railroad mergers and our thoughtfully developed long-term agreements and strong relationships with NS, CSX, and BNSF should provide the basis for us to accept any changes in the industry,” she said Wednesday. J.B. Hunt’s Field pushed back on speculation that a merger would force J.B. Hunt to shift all East Coast traffic to CSX. The assumption stems from the carrier’s long-standing partnership with BNSF Railway under the “Quantum Agreement,” a revenue-sharing arrangement formed more than 35 years ago which gives J.B. Hunt a pricing edge over competitors. It also launched a Quantum service product two years ago with a 95% on-time intermodal performance guarantee supported by J.B. Hunt staff embedded at BNSF’s headquarters in Texas. In recent months, BNSF and CSX have deepened their relationship, launching coast-to-coast intermodal routes linking Southern California with Charlotte and Jacksonville . Other coast-to-coast routes to the Northeast may be announced next year after CSX begins double-stack intermodal service through Baltimore next spring. This budding partnership has fueled speculation that J.B. Hunt could edge closer to CSX along with BNSF. Many West Coast rail contracts include exclusivity clauses preventing companies such as Hub Group or Schneider National from using BNSF in markets where UP also runs. J.B. Hunt’s BNSF deals carry similar restrictions, making it unlikely the carrier would be permitted to shift volume onto a merged UP–NS network in BNSF-served territories. Even so, J.B. Hunt could continue using a combined UP-NS network for freight to stay east of the Mississippi, where BNSF has no presence. “Any future merger that would be approved for whatever reason has been perceived that J.B. Hunt would have to move our traffic to CSX and that’s not accurate at all,” Field said. “There’s nothing about a future state new railroad that would mean our current Norfolk Southern footprint that we have today would be required to change.” Contact Ari Ashe at ari.ashe@spglobal.com . Senior Editor Eric Johnson contributed to this report.

North-American rail

Intermodal providers

J.B. Hunt: Intermodal volume retracts amid cost cutting measures

<div class="phx-topic abstract-wrapper">The investment in less carbon-intensive vessels is part of a $17 billion spending plan that also includes $3 billion on its logistics business and the acquisition of new container terminals by 2030.</div>

The investment in less carbon-intensive vessels is part of a $17 billion spending plan that also includes $3 billion on its logistics business and the acquisition of new container terminals by 2030.

<div class="phx-topic">HMM is pushing full steam ahead with alternative-fuel vessel plans with new orders for a dozen container ships that will be capable of running on LNG. The South Korea-based ocean carrier on Thursday confirmed orders with for 12 dual-fuel 13,000-TEU container vessels from HD Hyundai Heavy and Hanhwa Ocean worth a total of $2.55 billion. The deals are the first to be announced since HMM outlined plans in September to spend $8 billion on eco-friendly ships by 2030 to boost its operational fleet to 130 container ships totaling 1.55 million TEUs. The investment is part of a $17 billion spending plan that also includes $3 billion on its logistics business with the acquisition of new container terminals and extending existing facilities by 2030. Given their size, the new ships are likely to be deployed on the trans-Pacific trade between Asia and North America when delivered starting in 2027. The carrier has said it aims to be carbon-neutral across all transport modes by 2045. “By adding these new LNG dual-fueled vessels to its existing portfolio, which already includes methanol-powered containerships and LNG-powered vessels, HMM continues to strengthen its position in sustainable shipping,” the carrier said in a statement. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="3ea23764-fec2-4391-b0e3-4c5cff1b6eee"></dynamic-object></div>Container lines have been laser focused on ordering alternative-fueled ships in recent years. More than three-quarters of the total 7.2 million TEUs of container ship capacity ordered since the beginning of 2024 will be capable of running on LNG, methanol or hydrogen, according to data from Sea-web, a sister product of the Journal of Commerce with S&amp;P Global. HMM alone ordered 41 LNG- and methanol-fueled ships between 2018 and 2023. These included nine 9,000 TEU methanol-powered vessels ordered in February 2023, the first of which, HMM Green, was delivered in March. The remaining eight will be delivered in 2026, the line said. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

HMM is pushing full steam ahead with alternative-fuel vessel plans with new orders for a dozen container ships that will be capable of running on LNG. The South Korea-based ocean carrier on Thursday confirmed orders with for 12 dual-fuel 13,000-TEU container vessels from HD Hyundai Heavy and Hanhwa Ocean worth a total of $2.55 billion. The deals are the first to be announced since HMM outlined plans in September to spend $8 billion on eco-friendly ships by 2030 to boost its operational fleet to 130 container ships totaling 1.55 million TEUs. The investment is part of a $17 billion spending plan that also includes $3 billion on its logistics business with the acquisition of new container terminals and extending existing facilities by 2030. Given their size, the new ships are likely to be deployed on the trans-Pacific trade between Asia and North America when delivered starting in 2027. The carrier has said it aims to be carbon-neutral across all transport modes by 2045. “By adding these new LNG dual-fueled vessels to its existing portfolio, which already includes methanol-powered containerships and LNG-powered vessels, HMM continues to strengthen its position in sustainable shipping,” the carrier said in a statement. Container lines have been laser focused on ordering alternative-fueled ships in recent years. More than three-quarters of the total 7.2 million TEUs of container ship capacity ordered since the beginning of 2024 will be capable of running on LNG, methanol or hydrogen, according to data from Sea-web, a sister product of the Journal of Commerce with S&P Global. HMM alone ordered 41 LNG- and methanol-fueled ships between 2018 and 2023. These included nine 9,000 TEU methanol-powered vessels ordered in February 2023, the first of which, HMM Green, was delivered in March. The remaining eight will be delivered in 2026, the line said. Contact Keith Wallis at keithwallis@hotmail.com .

Container lines

Trans-Pacific

Container Shipping News

HMM inks $2.5 billion LNG container ship order

<div class="phx-topic abstract-wrapper">The trade war has become multi-dimensional with many different elements all impacting shipping and the supply chain, writes maritime and JOC analyst Lars Jensen. </div>

The trade war has become multi-dimensional with many different elements all impacting shipping and the supply chain, writes maritime and JOC analyst Lars Jensen.

<div class="phx-topic">Seen from the container shipping sector, the US trade war has become multi-dimensional and global in nature. The complexities are likely to grow further with shipping as a centrally impacted industry. Initially, the trade war mainly focused on tariffs — which countries were being hit by which magnitude of tariffs and on which commodities. The so-called “Liberation Day” where reciprocal tariffs on all countries in the world were announced was the clear embodiment of this early phase. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6098416_0.1.png"></img></div>Had this been the only element to the trade war and had the first round of reciprocal tariffs simply been kept in place, container shipping would have adapted to this. Tariff wars are not new, and the impact of such actions is somewhat predictable. Sourcing will shift and adapt to the new landscape, and goods will be sourced where it is most advantageous given the new landscape. Ships will follow and trade lanes adapt accordingly. It could potentially result in an overall demand reduction, but swings in demand and supply are something shipping stakeholders have been handling literally for centuries. This is not to imply it would have been without cost for the shipping industry, but simply to point out that the situation would have been within the parameters of what has also previously been handled. But as the months have gone on, the trade war has become multi-dimensional — developing many different elements all of which impact shipping and supply chains. <h3>Tariff changes speeding up </h3>A second front is that the speed of change in tariffs is accelerating. Deadlines for implementation of new tariffs, and details thereof, have become progressively faster to the point where cargo already loaded on vessels would now be subject to tariffs with the importer having no recourse but to accept the sudden increase in cost for goods already purchased. <a href="https://www.joc.com/article/importers-pump-brakes-as-they-tire-of-ever-changing-us-tariff-policy-analyst-6091571">Neither shippers nor carriers can physically adapt</a> to the supply chain at the speed of recent tariff changes. This creates an environment for shippers where planning a stable long-term supply chain is no longer a risk-mitigating activity but a source of risk. And in an environment for shipping lines where large-scale capacity reduction or capacity increases are necessary at extremely short notice — resulting in poor schedule adherence as well as erratic appearances of vessel capacity shortages (and excesses) — port congestion problems emerge at destination and at origin. <h3>A port fee standoff </h3>We arrive at the third dimension of the trade war: port fees based on nationality. At the headline level, this came with ample warning time from the US where Chinese shipping interests are targeted, albeit a range of details are still missing. Shipping lines planned and adapted accordingly by shuffling vessels in the network — a process taking place over a period of months. <a href="https://www.joc.com/article/chinas-port-fees-forcing-gemini-to-shift-out-us-flag-ships-6097952">But then came the Chinese reaction</a> in the form of similar tit-for-tat rules directed against US shipping interests. There was almost no lead time for the shipping lines that are still processing what the precise impact will be and how they will once more reshuffle vessels to mitigate it. Regarding this aspect of the trade war, the impact is especially important for COSCO, OOCL, Hede Shipping, Matson and APL, highlighting the clear US–China conflict. What is unknown is whether the next steps in this aspect will be to escalate or de-escalate. <h3>The coming fronts </h3>The fourth dimension has been brewing for 6 months and came to the headlines early in October in the form of the <a href="https://www.joc.com/article/white-house-sanctions-threat-ups-ante-ahead-of-pivotal-imo-meeting-6096646">US opposition to IMO’s Net Zero Framework</a> (NZF). At the time of writing <a href="https://www.joc.com/article/high-stakes-imo-decarbonization-meeting-begins-in-london-6097313">it is not yet known whether the IMO will vote in favor</a>, whether they will reject it or whether there will be a stalling action and push it 6 months to the next MEPC meeting. But the US made their position clear: if NZF is adopted, countries voting “yes” will be subject to US penalties. A range of possibilities were listed such as fees on vessels or entry bans to US ports. Should any of the proposed actions be implemented, then this will clearly open a fourth front of the trade war and directly impact shipping. A fifth front looms on the horizon — the FMC’s investigation into unfair practices related to flag state competition, especially from flags of convenience. This is on hold as the FMC staff is sent home due to the government shutdown. Eventually, the study will be completed, and it is highly likely a conclusion will be made which points to examples of what, from a US perspective, would be seen as unfair competitive practices. Looking at the actions the US government took following the USTR investigation on Chinese shipping practices, it is very likely the FMC study will act as well and, just as with the USTR port fees, open yet another front in the trade war involving shipping directly. Finally, a sixth front has opened in US ports where cranes and chassis <a href="https://www.joc.com/article/freeport-pays-crane-tariffs-to-avoid-ustr-fee-risk-6087337">are now subject to 100% duties</a>, and port handling equipment now faces a proposed 150% duty level. All of this has emerged during 2025 alone and has pushed container shipping into the center of the US trade war. Contact Lars Jensen at <a href="mailto:lars.jensen@vespucci-maritime.com">lars.jensen@vespucci-maritime.com</a>. </div>

Seen from the container shipping sector, the US trade war has become multi-dimensional and global in nature. The complexities are likely to grow further with shipping as a centrally impacted industry. Initially, the trade war mainly focused on tariffs — which countries were being hit by which magnitude of tariffs and on which commodities. The so-called “Liberation Day” where reciprocal tariffs on all countries in the world were announced was the clear embodiment of this early phase. Had this been the only element to the trade war and had the first round of reciprocal tariffs simply been kept in place, container shipping would have adapted to this. Tariff wars are not new, and the impact of such actions is somewhat predictable. Sourcing will shift and adapt to the new landscape, and goods will be sourced where it is most advantageous given the new landscape. Ships will follow and trade lanes adapt accordingly. It could potentially result in an overall demand reduction, but swings in demand and supply are something shipping stakeholders have been handling literally for centuries. This is not to imply it would have been without cost for the shipping industry, but simply to point out that the situation would have been within the parameters of what has also previously been handled. But as the months have gone on, the trade war has become multi-dimensional — developing many different elements all of which impact shipping and supply chains. Tariff changes speeding up A second front is that the speed of change in tariffs is accelerating. Deadlines for implementation of new tariffs, and details thereof, have become progressively faster to the point where cargo already loaded on vessels would now be subject to tariffs with the importer having no recourse but to accept the sudden increase in cost for goods already purchased. Neither shippers nor carriers can physically adapt to the supply chain at the speed of recent tariff changes. This creates an environment for shippers where planning a stable long-term supply chain is no longer a risk-mitigating activity but a source of risk. And in an environment for shipping lines where large-scale capacity reduction or capacity increases are necessary at extremely short notice — resulting in poor schedule adherence as well as erratic appearances of vessel capacity shortages (and excesses) — port congestion problems emerge at destination and at origin. A port fee standoff We arrive at the third dimension of the trade war: port fees based on nationality. At the headline level, this came with ample warning time from the US where Chinese shipping interests are targeted, albeit a range of details are still missing. Shipping lines planned and adapted accordingly by shuffling vessels in the network — a process taking place over a period of months. But then came the Chinese reaction in the form of similar tit-for-tat rules directed against US shipping interests. There was almost no lead time for the shipping lines that are still processing what the precise impact will be and how they will once more reshuffle vessels to mitigate it. Regarding this aspect of the trade war, the impact is especially important for COSCO, OOCL, Hede Shipping, Matson and APL, highlighting the clear US–China conflict. What is unknown is whether the next steps in this aspect will be to escalate or de-escalate. The coming fronts The fourth dimension has been brewing for 6 months and came to the headlines early in October in the form of the US opposition to IMO’s Net Zero Framework (NZF). At the time of writing it is not yet known whether the IMO will vote in favor , whether they will reject it or whether there will be a stalling action and push it 6 months to the next MEPC meeting. But the US made their position clear: if NZF is adopted, countries voting “yes” will be subject to US penalties. A range of possibilities were listed such as fees on vessels or entry bans to US ports. Should any of the proposed actions be implemented, then this will clearly open a fourth front of the trade war and directly impact shipping. A fifth front looms on the horizon — the FMC’s investigation into unfair practices related to flag state competition, especially from flags of convenience. This is on hold as the FMC staff is sent home due to the government shutdown. Eventually, the study will be completed, and it is highly likely a conclusion will be made which points to examples of what, from a US perspective, would be seen as unfair competitive practices. Looking at the actions the US government took following the USTR investigation on Chinese shipping practices, it is very likely the FMC study will act as well and, just as with the USTR port fees, open yet another front in the trade war involving shipping directly. Finally, a sixth front has opened in US ports where cranes and chassis are now subject to 100% duties , and port handling equipment now faces a proposed 150% duty level. All of this has emerged during 2025 alone and has pushed container shipping into the center of the US trade war. Contact Lars Jensen at lars.jensen@vespucci-maritime.com .

Transport, Trade and Regulation News

US trade war has multiple fronts to disrupt shipping: analyst

<div class="phx-topic abstract-wrapper">Industrial action by auxiliary workers in Rotterdam and Antwerp-Bruges is heavily disrupting operations in the regions two busiest container ports.</div>

Industrial action by auxiliary workers in Rotterdam and Antwerp-Bruges is heavily disrupting operations in the regions two busiest container ports.

<div class="phx-topic">Strike action continues to disrupt operations at Europe’s two busiest container hubs, Rotterdam and Antwerp-Bruges, resulting in reduced handling capacity and backlogs that could take weeks to clear. If container lashing companies and FNV Havens union in Rotterdam fail to reach an agreement over working conditions and wages by Friday morning, workers critical to handling operations will resume strike action that has been suspended since the weekend following a court ruling. The 48-hour strike by 700 lashers last week has left Rotterdam already facing a backlog of 19 vessels, 11 of them deep-sea ships, that a spokesperson for the port said would take “several weeks” to clear even without further strike action. “Tonight, we will know if the lashers have reached an agreement with their employers. If not, the strike will resume tomorrow (Friday) at 7 am,” the spokesperson told the Journal of Commerce. A broad delegation from the logistics sector asked a Dutch court last Saturday to prohibit or limit the strike by the lashers because of “major social consequences.” It was agreed that the lashers would return to work on Monday, but strikes would resume Friday if no agreement was reached between the lashing workers and their employers. While Rotterdam noted in a statement following the court ruling that although the four-day solution was “not ideal,” it would allow essential goods to enter the Netherlands. “The aim was and is to protect the interests of the logistics sector and society from the far-reaching consequences of the strike,” the port statement noted. “We remain of the opinion that the action is currently causing disproportionate damage and putting serious pressure on security of supply.” The dispute has impacted all of the major container terminals in Rotterdam: APM Terminals Maasvlakte II, Hutchinson Ports Delta II, ECT Delta and Rotterdam World Gateway. <h3>Pilots in ‘maximum rest’ action </h3>In Antwerp, a “maximum rest” slowdown by sea pilots in the BVL union has left the logistics chain to and from the port operating at 70% of normal capacity, officials said in a “crisis” update Thursday. Flemish pilots have been protesting federal pension reforms since Oct. 5, with the port disruption exacerbated by a national general workers strike in Belgium on Tuesday this week. The industrial action has caused significant congestion on the Scheldt River that provides deep-sea access to Antwerp’s container terminals, affecting 60 outbound and 128 inbound vessels, according to the port. “The [strike] actions are expected to continue until Sunday ... clearing the backlog caused by the various actions will take several more days,” Antwerp-Bruges said in its latest update. A spokesperson for Hapag-Lloyd said the carrier was “closely monitoring the evolving strike actions” at both ports. “In Rotterdam, lashing operations remain unstable and further industrial action is anticipated should negotiations fail by Friday, Oct. 17,” the spokesperson told the Journal of Commerce. “In Belgium, the consequences of the general strike and ongoing pilot actions continue to impact vessel movements and port accessibility. At the moment, we are seeing delays of some hours to three days of our services across affected terminals.” Kuehne + Nagel’s SeaExplorer visibility platform has described operations at both Rotterdam and Antwerp-Bruges as “heavily disrupted.” The strike action is doing nothing positive for overall Asia-Europe schedule reliability that continues to present shippers with the worst on-time performance among the major ocean corridors. In September, on-time vessel performance of 23% was a slight improvement on the 17% recorded in August, according to industry analyst Xeneta. Contact <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Strike action continues to disrupt operations at Europe’s two busiest container hubs, Rotterdam and Antwerp-Bruges, resulting in reduced handling capacity and backlogs that could take weeks to clear. If container lashing companies and FNV Havens union in Rotterdam fail to reach an agreement over working conditions and wages by Friday morning, workers critical to handling operations will resume strike action that has been suspended since the weekend following a court ruling. The 48-hour strike by 700 lashers last week has left Rotterdam already facing a backlog of 19 vessels, 11 of them deep-sea ships, that a spokesperson for the port said would take “several weeks” to clear even without further strike action. “Tonight, we will know if the lashers have reached an agreement with their employers. If not, the strike will resume tomorrow (Friday) at 7 am,” the spokesperson told the Journal of Commerce. A broad delegation from the logistics sector asked a Dutch court last Saturday to prohibit or limit the strike by the lashers because of “major social consequences.” It was agreed that the lashers would return to work on Monday, but strikes would resume Friday if no agreement was reached between the lashing workers and their employers. While Rotterdam noted in a statement following the court ruling that although the four-day solution was “not ideal,” it would allow essential goods to enter the Netherlands. “The aim was and is to protect the interests of the logistics sector and society from the far-reaching consequences of the strike,” the port statement noted. “We remain of the opinion that the action is currently causing disproportionate damage and putting serious pressure on security of supply.” The dispute has impacted all of the major container terminals in Rotterdam: APM Terminals Maasvlakte II, Hutchinson Ports Delta II, ECT Delta and Rotterdam World Gateway. Pilots in ‘maximum rest’ action In Antwerp, a “maximum rest” slowdown by sea pilots in the BVL union has left the logistics chain to and from the port operating at 70% of normal capacity, officials said in a “crisis” update Thursday. Flemish pilots have been protesting federal pension reforms since Oct. 5, with the port disruption exacerbated by a national general workers strike in Belgium on Tuesday this week. The industrial action has caused significant congestion on the Scheldt River that provides deep-sea access to Antwerp’s container terminals, affecting 60 outbound and 128 inbound vessels, according to the port. “The [strike] actions are expected to continue until Sunday ... clearing the backlog caused by the various actions will take several more days,” Antwerp-Bruges said in its latest update. A spokesperson for Hapag-Lloyd said the carrier was “closely monitoring the evolving strike actions” at both ports. “In Rotterdam, lashing operations remain unstable and further industrial action is anticipated should negotiations fail by Friday, Oct. 17,” the spokesperson told the Journal of Commerce. “In Belgium, the consequences of the general strike and ongoing pilot actions continue to impact vessel movements and port accessibility. At the moment, we are seeing delays of some hours to three days of our services across affected terminals.” Kuehne + Nagel’s SeaExplorer visibility platform has described operations at both Rotterdam and Antwerp-Bruges as “heavily disrupted.” The strike action is doing nothing positive for overall Asia-Europe schedule reliability that continues to present shippers with the worst on-time performance among the major ocean corridors. In September, on-time vessel performance of 23% was a slight improvement on the 17% recorded in August, according to industry analyst Xeneta. Contact greg.knowler@spglobal.com .

Port News

International ports

Growing box backlogs at Europe’s strike-hit hubs could take weeks to clear

<div class="phx-topic abstract-wrapper">Seasonal demand is believed to fuel most of the moderate pricing gains, with the impact of a driver licensing crackdown perhaps affecting outbound lanes from Southern California.</div>

Seasonal demand is believed to fuel most of the moderate pricing gains, with the impact of a driver licensing crackdown perhaps affecting outbound lanes from Southern California.

<div class="phx-topic">Freight imbalances and changes in capacity in certain lanes are tightening US truckload capacity, but not by much. Lower import volumes and a crackdown on illegal drivers have combined with seasonal peak demand to push spot pricing higher in some lanes, but most measures of dry-van truckload spot pricing have changed little since August. Transactional truckload pricing is rising but “it’s not a paradigm shift by any means,” said Paul Brashier, vice president of global supply chain for ITS Logistics. “It’s still a soft market, but we’ve seen cancellations increase and rates per mile nudge up,” Brashier said. “Is this something that changes the market post-peak? That’s still to be determined.” Over the course of 2025, several events, including the Fourth of July holiday and nationwide roadside truck and driver inspections, have led to <a href="https://www.joc.com/article/ltl-truckload-pricing-rising-despite-soft-demand-6079263">short-term surges</a> in spot truckload pricing, but rates <a href="https://www.joc.com/article/us-truckload-market-mired-in-malaise-as-import-surge-wanes-6075566">have fallen back</a> after those events. There’s no clear evidence of either a demand catalyst or a supply chokepoint that would change that pattern. Truckload rates typically increase during the fourth-quarter peak. Last year, the US average dry-van rate from DAT Freight &amp; Analytics rose from $1.61 per mile on Sept. 15 to $1.84 per mile on Jan. 5, 2025, before dropping back to $1.60 per mile by April 13. Indications are that spot rates are on a similar seasonal trajectory at the start of the fourth quarter. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="140c93da-33a2-4f0a-8ecf-304f1b6fd739"></dynamic-object></div>The US average dry-van linehaul rate for the week ended Oct. 11 was $1.70 per mile, flat with the previous week and up 6 cents from a year ago, according to DAT Freight &amp; Analytics. Dry-van rates at Truckstop.com were more volatile, with the US average falling more than 4 cents to $1.93 per mile after rising nearly 7 cents the previous week. <h3>Other factors moving market </h3>Truckload rates are inching upward despite weak demand, which suggests other factors are inflating rates, DAT Chief of Analytics Ken Adamo said in a statement. “Freight imbalances and changes in available capacity drove rates higher in certain markets, as opposed to volumes,” Adamo said. <a href="https://www.joc.com/article/lower-us-imports-tightening-truck-capacity-at-key-inland-hubs-6094920">Lower import volumes</a> may be part of the mix. The Cass Truckload Linehaul Index, a measure of pricing, rose 1.7% in September from August and was up 2.6% from a year ago. The index is down 1% from two years ago, however. The US long-distance truckload producer price index in August was nearly flat year over year. The September report has been delayed by the US government shutdown. Shippers contacted by the Journal of Commerce expect contract rates for 2025 to range from flat to higher by low single-digit percentages year over year. Like most analysts, they see little that would shift freight demand and truckload pricing into higher gear. Within trucking, there's continuous debate over what might be the next supply shock. Predictions that the exit of thousands of small trucking firms would tighten capacity and flip the market have fallen flat. In 2025, more transportation analysts and trucking executives have talked about a developing “equilibrium” in the truckload market, a balance between supply and demand that could be upset by relatively small changes. “We’re setting up for increased vulnerability in the market next year,” David Spencer, vice president of market intelligence for Arrive Logistics, told the Journal of Commerce. “It’s really next year when we start to see other forces (beyond seasonality) begin to have an impact,” he added, referring in part to a crackdown on drivers in the US illegally. <h3>ELP impact </h3>That crackdown on non-English-speaking truck drivers and those working in the US illegally with non-domiciled commercial driver’s licenses (CDLs) is highlighted by nearly every analyst or executive speaking on the outlook for the trucking market. However, the impact of that crackdown, which <a href="https://www.joc.com/article/us-dot-presses-states-to-enforce-english-language-trucking-rules-6069884">began in June</a>, on the overall market has been negligible. As of Sept. 26, out-of-service (OOS) orders had been issued for 5,006 out of 12,055 violations issued to drivers year-to-date for failing to meet English-language proficiency (ELP) standards, according to the Federal Motor Carrier Safety Administration (FMCSA). In comparison, about 31,000 OOS orders were issued for driving without a valid CDL. The total number of OOS orders issued during roadside inspections for all types of driver violations to date in 2025 is 202,257. State officials have issued 873,977 violations. Since June, the FMCSA has viewed an ELP violation as an out-of-service violation, except for drivers operating within the commercial zone along the US-Mexico border. The Department of Transportation (DOT) has been investigating state issuance of non-domiciled CDLs and <a href="https://www.joc.com/article/usdot-cracks-down-on-non-domiciled-cdls-targets-california-6087419">intensified a crackdown</a> on those licenses in September. Although estimates of the number of drivers who could be disqualified by the crackdown on licensing and English-language skills range as high as 200,000 or more, exact numbers for unqualified, illegal or non-English-speaking drivers are, not surprisingly, hard to come by. Enforcement to date has not had a direct impact on the overall market. The crackdown may be having an impact in specific lanes, notably outbound lanes from Southern California and westbound lanes from crossing points along the US-Mexico border. “You might be seeing an impact in some of the markets that have a higher propensity for non-domiciled drivers,” ITS’s Brashier said, noting California in particular. Brashier said ITS has seen capacity tighten in long-haul lanes – those more than 500 miles – while short-haul capacity has been more readily available. “We’re having no problem (finding capacity) in intra-Texas lanes,” he said. But that could reflect existing trends toward more regional freight, rather than a loss of non-domiciled CDL drivers. Contact William B. Cassidy at <a href="mailto://bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a></div>

Freight imbalances and changes in capacity in certain lanes are tightening US truckload capacity, but not by much. Lower import volumes and a crackdown on illegal drivers have combined with seasonal peak demand to push spot pricing higher in some lanes, but most measures of dry-van truckload spot pricing have changed little since August. Transactional truckload pricing is rising but “it’s not a paradigm shift by any means,” said Paul Brashier, vice president of global supply chain for ITS Logistics. “It’s still a soft market, but we’ve seen cancellations increase and rates per mile nudge up,” Brashier said. “Is this something that changes the market post-peak? That’s still to be determined.” Over the course of 2025, several events, including the Fourth of July holiday and nationwide roadside truck and driver inspections, have led to short-term surges in spot truckload pricing, but rates have fallen back after those events. There’s no clear evidence of either a demand catalyst or a supply chokepoint that would change that pattern. Truckload rates typically increase during the fourth-quarter peak. Last year, the US average dry-van rate from DAT Freight & Analytics rose from $1.61 per mile on Sept. 15 to $1.84 per mile on Jan. 5, 2025, before dropping back to $1.60 per mile by April 13. Indications are that spot rates are on a similar seasonal trajectory at the start of the fourth quarter. The US average dry-van linehaul rate for the week ended Oct. 11 was $1.70 per mile, flat with the previous week and up 6 cents from a year ago, according to DAT Freight & Analytics. Dry-van rates at Truckstop.com were more volatile, with the US average falling more than 4 cents to $1.93 per mile after rising nearly 7 cents the previous week. Other factors moving market Truckload rates are inching upward despite weak demand, which suggests other factors are inflating rates, DAT Chief of Analytics Ken Adamo said in a statement. “Freight imbalances and changes in available capacity drove rates higher in certain markets, as opposed to volumes,” Adamo said. Lower import volumes may be part of the mix. The Cass Truckload Linehaul Index, a measure of pricing, rose 1.7% in September from August and was up 2.6% from a year ago. The index is down 1% from two years ago, however. The US long-distance truckload producer price index in August was nearly flat year over year. The September report has been delayed by the US government shutdown. Shippers contacted by the Journal of Commerce expect contract rates for 2025 to range from flat to higher by low single-digit percentages year over year. Like most analysts, they see little that would shift freight demand and truckload pricing into higher gear. Within trucking, there's continuous debate over what might be the next supply shock. Predictions that the exit of thousands of small trucking firms would tighten capacity and flip the market have fallen flat. In 2025, more transportation analysts and trucking executives have talked about a developing “equilibrium” in the truckload market, a balance between supply and demand that could be upset by relatively small changes. “We’re setting up for increased vulnerability in the market next year,” David Spencer, vice president of market intelligence for Arrive Logistics, told the Journal of Commerce. “It’s really next year when we start to see other forces (beyond seasonality) begin to have an impact,” he added, referring in part to a crackdown on drivers in the US illegally. ELP impact That crackdown on non-English-speaking truck drivers and those working in the US illegally with non-domiciled commercial driver’s licenses (CDLs) is highlighted by nearly every analyst or executive speaking on the outlook for the trucking market. However, the impact of that crackdown, which began in June , on the overall market has been negligible. As of Sept. 26, out-of-service (OOS) orders had been issued for 5,006 out of 12,055 violations issued to drivers year-to-date for failing to meet English-language proficiency (ELP) standards, according to the Federal Motor Carrier Safety Administration (FMCSA). In comparison, about 31,000 OOS orders were issued for driving without a valid CDL. The total number of OOS orders issued during roadside inspections for all types of driver violations to date in 2025 is 202,257. State officials have issued 873,977 violations. Since June, the FMCSA has viewed an ELP violation as an out-of-service violation, except for drivers operating within the commercial zone along the US-Mexico border. The Department of Transportation (DOT) has been investigating state issuance of non-domiciled CDLs and intensified a crackdown on those licenses in September. Although estimates of the number of drivers who could be disqualified by the crackdown on licensing and English-language skills range as high as 200,000 or more, exact numbers for unqualified, illegal or non-English-speaking drivers are, not surprisingly, hard to come by. Enforcement to date has not had a direct impact on the overall market. The crackdown may be having an impact in specific lanes, notably outbound lanes from Southern California and westbound lanes from crossing points along the US-Mexico border. “You might be seeing an impact in some of the markets that have a higher propensity for non-domiciled drivers,” ITS’s Brashier said, noting California in particular. Brashier said ITS has seen capacity tighten in long-haul lanes – those more than 500 miles – while short-haul capacity has been more readily available. “We’re having no problem (finding capacity) in intra-Texas lanes,” he said. But that could reflect existing trends toward more regional freight, rather than a loss of non-domiciled CDL drivers. Contact William B. Cassidy at bill.cassidy@spglobal.com

Trucking News

Truckload

Surface

US truckload pricing inches higher as trucking’s peak beckons

Use code GTW595 at checkout and save $900 on first year of an annual Gold subscription!

Upgrade Subscription - Gold Trials

Become a Gold Subscriber and Save!

Arm your team with the most trusted information portal for the international container shipping industry.

Group Subscriptions - Wide Box

Get into a group subscription today

Use code STSW20 at checkout to save 20% on a Silver or Silver Plus annual subscription! 

Subscribe Now - FT/Anonymous to S/SP - Wide Box

SUBSCRIBE TODAY AND SAVE!

Upgrade to Gold using code TPMGW595 to save $900 on first year of a Gold subscription and 20% on a TPM26 registration!

Upgrade Subscription - S/SP to Gold - Wide Box

SAVE MORE WITH GOLD

Access Journal of Commerce content for 30 days

Free Trial - Wide Box

START A FREE TRIAL TODAY

Use code TPM26GW995 at checkout to save $500 on first year of a Gold subscription and 20% on a TPM26 registration!

Subscribe Now - FT/Anonymous to Gold - Wide Box

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>

SMC3rates_shutterstock_5247046 (1).jpg

Filling the Supply Chain Education Gap with LTL Education Courses

START A FREE TRIAL: Access Journal of Commerce content for 30 days

Free Trial - Offer Box

Free Trial

SUBSCRIBE AND SAVE: Use code STSW20 to save 20% on first year of a Silver or Silver Plus annual subscription!


Subscribe Now - FT/Anonymous to S/SP - Offer Box

SUBSCRIBE AND SAVE

GET INTO A GROUP SUBSCRIPTION: Arm your team with unlimited Journal of Commerce content

Group Subscriptions - Offer Box

Group Subscriptions

UPGRADE TO GOLD AND SAVE: Use code GTW595 at checkout and save $900 on first year of a Gold subscription!

Upgrade Subscription

SAVE MORE WITH GOLD: Upgrade to Gold using code TPMGW595 to save $900 on first year of a Gold subscription and 20% on TPM26! 

Upgrade Subscription - S/SP to Gold - Offer Box

SAVE MORE WITH GOLD: Use code TPM26GW995 at checkout to save $500 on a Gold subscription and 20% on a TPM26 registration!

Subscribe Now - FT/Anonymous to Gold - Offer Box

Monthly publication providing an editorial deep dive into global supply chain news

Journal of Commerce Magazine - Rectangle Box

Journal of Commerce Magazine

A premium access index of savings using domestic intermodal vs. OTR 

ISI Report - Rectangle Box

Intermodal Savings Index

An in-depth analysis of transport trends in the multipurpose and heavy-lift fleet segment

Breakbulk Report - Rectangle Box

Breakbulk Quarterly

An extensive dashboard of charts organized by trade lane, mode, and topic

Gateway - Rectangle Box

Gateway

Customers scoring their intermodal partners to identify the best service providers

Intermodal Service Scorecard - Rectangle Box

Intermodal Service Scorecard

A premium access outlook critical to shippers and transportation providers

QI Report - Rectangle Box

Quarterly Intelligence

The premier conference for the global container shipping and supply chain community

TPM Conference - Rectangle Box

Attend TPM26

The only editorially independent conference for the breakbulk & project cargo industry

Breakbulk Conference - Rectangle Box

Attend Breakbulk26

The Journal of Commerce is the industry’s source for maritime news and analysis about ocean container shipping, logistics, supply chains, global shipping ports, shipping technology solutions and end-to-end connectivity. Coverage tracks the movement of containerized cargo — from origin to destination — handled by marine terminals in the US and abroad, depots, container ports, container lines, drayage, consignees and shippers, forwarders, non-vessel operating common carriers (NVOs) and off-dock warehousing providers, as well as pricing, capacity, volume and reliability on the trans-Pacific, Asia–Europe, North America–Caribbean, Central and South American and intra-Asia trades.

Discover comprehensive trucking news and trends with Journal of Commerce - from trucking LTL to regulation and trucking supply and demand.

Breakbulk News shipping | Journal of Commerce

Breakbulk News

Container shipping news and analysis of ocean container shipping, logistics, supply chains, technology and end-to-end connectivity.

Container Shipping News | Journal of Commerce

Stay informed on port news worldwide with Journal of Commerce. From decarbonization to labor updates, get insights on global developments.

Port News | Journal of Commerce

News and analysis of ocean containerized cargo movement, logistics, supply chains, technology, and end-to-end connectivity. Maritime news and analysis of containerized ocean cargo movement, breakbulk and roll-on and roll-off shipping from origin to destination.

Latest News

More News & Analysis

J.B. Hunt: Intermodal volume retracts amid cost cutting measures

HMM inks $2.5 billion LNG container ship order

US trade war has multiple fronts to disrupt shipping: analyst