<div class="phx-topic abstract-wrapper">While Mexico’s Pacific Coast ports have so far seen little decline in cargo volumes due to coronavirus disease 2019 (COVID-19), some logistics providers expect volumes to fall beginning this month.</div>

While Mexico’s Pacific Coast ports have so far seen little decline in cargo volumes due to coronavirus disease 2019 (COVID-19), some logistics providers expect volumes to fall beginning this month.

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<div>Mexican port and logistics executives expect blank sailings and a decline in cargo volumes through the ports to kick in soon due to China’s reduced production stemming from the coronavirus disease 2019 (COVID-19), with a possible impact on the country’s auto sector.Cargo volumes on the Pacific Coast fell 1.1 percent in January from the year prior, driven largely by a 7.2 percent decline in volumes at the Port of Lázaro Cárdenas, according to figures from the Secretariat of Communications and Transportation (SCT). Volume through the Port of Manzanillo was flat. The coastwide decline was smaller than the 2.1 percent fall...

Mexican port and logistics executives expect blank sailings and a decline in cargo volumes through the ports to kick in soon due to China’s reduced production stemming from the coronavirus disease 2019 (COVID-19), with a possible impact on the country’s auto sector. Cargo volumes on the Pacific Coast fell 1.1 percent in January from the year prior, driven largely by a 7.2 percent decline in volumes at the Port of Lázaro Cárdenas, according to figures from the Secretariat of Communications and Transportation (SCT). Volume through the Port of Manzanillo was flat. The coastwide decline was smaller than the 2.1 percent fall in all of 2019, and port officials say that so far, they have seen little impact from the Chinese production slowdown. Yet several sources said they expect a significant decline beginning in March on the Pacific Coast, which is where almost all cargo from China enters Mexico. One Pacific Coast terminal operator, who asked not to be identified, said the carriers have confirmed 20 blank sailings from Asia before April, all of them on the West Coast. He expects Mexico to see a loss of about 120,000 containers in the first quarter of the year. Based on the 2019 first quarter volume of 507,275 on the Pacific Coast, as reported by the SCT, that would mean a decline of about 24 percent in cargo volume. Click to Enlarge An ocean carrier executive who asked not to be identified said his firm saw cargo volumes grow 32 percent and 9 percent, respectively, in January and February, compared with the same months last year. But the carrier is anticipating a 20 to 25 percent decline in March. In the West Coast Port of Manzanillo, an executive at a terminal operator said cargo volumes in January and February have been in line with expectations, but the terminal is expecting blank sailings in March. Customs chief predicts cargo drop Ricardo Ahued Bardahuil, general administrator of customs in Mexico, said it is “inevitable” that the country will see a decline given the extended factory shutdowns in China, according to an interview with XEU Noticias, a news outlet based in the Mexican state of Veracruz, which posted audio of the interview online. “This is going to hold back a lot of products that would otherwise have come to our country,” said Bardahuil, who said he could not estimate how much cargo volumes would drop in the future. Kansas City Southern Railway Co. (KCS), which operates Kansas City Southern of Mexico (KCSM), said at the 41st Annual Raymond James Institutional Investors Conference in Florida on Mar. 2 it expects the coronavirus to impact Mexican import volumes starting in March, especially at the Port of Lázaro Cárdenas. Cargo through the port accounts for 40 percent of the railroad’s intermodal volume, while 40 percent of the cargo through the port comes from China, and another 19 percent from South Korea, according to KCS. South Korea’s Port of Busan has dealt with heavy congestion, and disruption of some trans-Pacific services due to increased transshipment volumes diverted from Chinese ports. “So roughly 60 percent of our container traffic at Lazaro could see some disruption,” KCS chief financial officer Michael W. Upchurch told the conference, according to a recording posted by financial and investment webcaster Wall Street Webcasting. The 25- to 30-day sea trip from China to Lázaro Cárdenas means volumes will likely dip in late March and early April, said Upchurch, adding that the company is watching Mexico’s auto sector to gauge the impact. “There are some parts and components that do come from the Far East. There may be options to source from other locations, and it’s one we are taking a pretty close look at,” he said. Based on conversations with customers, KCSM expects a bounce back in cargo volumes after the downturn, Upchurch said. The railroad has seen no impact from the coronavirus on the Panama Canal Railway, of which KCS owns a 50 percent share, nor on KCS’s cross-border US to Mexico business, he said. Challenging economy The Mexican economy is already struggling, with GDP increasing a mere 0.1 percent in 2019 and expected to grow just 0.7 percent in 2020, according to IHS Markit, parent company of JOC.com. The volume of cargo handled by Mexican ports fell 1.5 percent year over year to 4.93 million loaded TEU in 2019, the first decline in six years, according to SCT figures. Miguel Angel Yañez-Monroy, director general for the Port of Veracruz, Mexico’s second-largest port and the largest on the Gulf Coast, said he does not expect to see cargo volumes fall. The port has no direct services from China, and “we are not expecting any decline” due to the coronavirus, unless it impacts the wider economy, he said. Contact Hugh R. Morley at hugh.morley@ihsmarkit.com and follow him on Twitter: @HughRMorley1 .

International ports

Mexican ports prep for coronavirus-driven cargo slump

<div class="phx-topic abstract-wrapper">The Digital Container Shipping Association’s partnership program has grown in the last month, with the global home furnishings retailer following last week’s addition of European vessel operator Unifeeder.</div>

The Digital Container Shipping Association’s partnership program has grown in the last month, with the global home furnishings retailer following last week’s addition of European vessel operator Unifeeder.

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<div class="phx-topic">IKEA on Tuesday joined the Digital Container Shipping Association’s (DCSA) partnership program, becoming the first shipper added to a growing list of carriers, forwarders, terminals, feeders and technology providers involved in the program. In joining the DCSA+ program, IKEA Supply AG, which is responsible for the flow of IKEA products from suppliers to franchisees worldwide, said it is aiming to ship more sustainably and predictably by advancing the digital standards that DCSA has developed for its members and other industry participants. “By joining DCSA+, we can help create digital solutions that make it easier for everyone involved to share information, improve transparency, and in the end deliver better shopping experiences for IKEA customers around the world by making sure our products are available where and when they need them at an affordable price,” Ewelina Taylor, global transport manager at Inter IKEA Group, said in a statement. IKEA joins Unifeeder, Europe’s largest shortsea and feeder operator and part of DP World, as <a href="https://www.joc.com/article/unifeeder-adds-scale-to-dcsas-partnership-program-6123850">recent entrants to the DCSA+ program</a>, which has more than a dozen participants, including logistics software vendors WNS and Vinturas, the Port of Valencia and Lufthansa Industry Solutions. Adding a shipper to its ecosystem is an important step for DCSA, which for years has been encouraging shippers to press their ocean carrier and 3PL partners to adopt the standards the consortium has developed around cargo tracking, electronic bills of lading, just-in-time port calls, schedules and more. “Having a global category leader engage directly in this work validates the relevance of the DCSA+ model and strengthens collaboration between cargo owners and carriers as we move toward consistent digital practices across the industry,” Mariana Bock-Losada, chief growth officer at DCSA, said in the statement. DCSA last month launched an <a href="https://www.joc.com/article/dcsa-broadens-reach-with-identity-exchange-for-shipping-industry-6119020">identity exchange tool</a> for companies in the logistics industry to manage internal compliance checks, its first such product. The ocean carrier members of DCSA are Mediterranean Shipping Co., Hapag-Lloyd, Maersk, CMA CGM, Evergreen, HMM, Yang Ming, Zim Integrated Shipping Services and PIL. Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

IKEA on Tuesday joined the Digital Container Shipping Association’s (DCSA) partnership program, becoming the first shipper added to a growing list of carriers, forwarders, terminals, feeders and technology providers involved in the program. In joining the DCSA+ program, IKEA Supply AG, which is responsible for the flow of IKEA products from suppliers to franchisees worldwide, said it is aiming to ship more sustainably and predictably by advancing the digital standards that DCSA has developed for its members and other industry participants. “By joining DCSA+, we can help create digital solutions that make it easier for everyone involved to share information, improve transparency, and in the end deliver better shopping experiences for IKEA customers around the world by making sure our products are available where and when they need them at an affordable price,” Ewelina Taylor, global transport manager at Inter IKEA Group, said in a statement. IKEA joins Unifeeder, Europe’s largest shortsea and feeder operator and part of DP World, as recent entrants to the DCSA+ program , which has more than a dozen participants, including logistics software vendors WNS and Vinturas, the Port of Valencia and Lufthansa Industry Solutions. Adding a shipper to its ecosystem is an important step for DCSA, which for years has been encouraging shippers to press their ocean carrier and 3PL partners to adopt the standards the consortium has developed around cargo tracking, electronic bills of lading, just-in-time port calls, schedules and more. “Having a global category leader engage directly in this work validates the relevance of the DCSA+ model and strengthens collaboration between cargo owners and carriers as we move toward consistent digital practices across the industry,” Mariana Bock-Losada, chief growth officer at DCSA, said in the statement. DCSA last month launched an identity exchange tool for companies in the logistics industry to manage internal compliance checks, its first such product. The ocean carrier members of DCSA are Mediterranean Shipping Co., Hapag-Lloyd, Maersk, CMA CGM, Evergreen, HMM, Yang Ming, Zim Integrated Shipping Services and PIL. Contact Eric Johnson at eric.johnson@spglobal.com .

Logistics Technology News

Container Shipping News

Maritime

IKEA becomes first shipper to join carrier digital consortium program

<div class="phx-topic abstract-wrapper">Ocean carriers and terminal stakeholders at Sri Lanka’s Colombo Port are dealing with operational chaos that resulted from a three-day shutdown caused by Cyclone Ditwah, said to be the strongest storm to have struck the country in nearly a decade.</div>

Ocean carriers and terminal stakeholders at Sri Lanka’s Colombo Port are dealing with operational chaos that resulted from a three-day shutdown caused by Cyclone Ditwah, said to be the strongest storm to have struck the country in nearly a decade.

<div class="phx-topic">Several parts of Southeast Asia have been through extreme weather events over the past week or so, causing widespread transport network disruptions, both quayside and inland. Ocean carriers and terminal stakeholders at Sri Lanka’s Colombo Port are dealing with operational chaos that resulted from a three-day shutdown caused by Cyclone Ditwah, said to be the strongest storm to have struck the country in nearly a decade. Colombo – South Asia’s leading container hub – on Nov. 26 suspended all operations in response to a government weather advisory. The port reopened to traffic Saturday morning, facing a long queue of ships to be serviced. As the backlog of anchored vessels slowly eases, sources put average berthing delays across Colombo terminals as of Tuesday at two to three days. “While yard occupancy is at a manageable level, restoring normal vessel windows could take several days after a 72-hour marine halt,” a Colombo terminal executive who didn’t want to be identified told the Journal of Commerce. “Inter-terminal container movements are now smooth due to low on-dock volumes.” The port authority has allowed cargo owners additional free days to clear stranded boxes, but inland freight services into Sri Lanka’s interior remain hobbled by damaged rail and road links, sources say. In India, while no port closures have been declared along the east coast that is facing a bout of stormy weather over the last two days, local shipping sources have reported delays to vessel sailings and cargo flows across main gateways in the region, including Chennai, Tuticorin, Ennore and Kattupalli. “Terminals are operating at a slower pace due to challenging conditions,” said a Chennai-based ship agent. Weather has also been a major concern for supply chain and business stakeholders across Malaysia, Vietnam and Thailand, according to reports. “The floods have resulted in some road closures, likely impacting container traffic to and from Port Klang,” global forwarder Kuehne + Nagel said in a report. “As a result, there have been requests to extend the timeline for laden containers to be turned into the port.” Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com.</a></div>

Several parts of Southeast Asia have been through extreme weather events over the past week or so, causing widespread transport network disruptions, both quayside and inland. Ocean carriers and terminal stakeholders at Sri Lanka’s Colombo Port are dealing with operational chaos that resulted from a three-day shutdown caused by Cyclone Ditwah, said to be the strongest storm to have struck the country in nearly a decade. Colombo – South Asia’s leading container hub – on Nov. 26 suspended all operations in response to a government weather advisory. The port reopened to traffic Saturday morning, facing a long queue of ships to be serviced. As the backlog of anchored vessels slowly eases, sources put average berthing delays across Colombo terminals as of Tuesday at two to three days. “While yard occupancy is at a manageable level, restoring normal vessel windows could take several days after a 72-hour marine halt,” a Colombo terminal executive who didn’t want to be identified told the Journal of Commerce. “Inter-terminal container movements are now smooth due to low on-dock volumes.” The port authority has allowed cargo owners additional free days to clear stranded boxes, but inland freight services into Sri Lanka’s interior remain hobbled by damaged rail and road links, sources say. In India, while no port closures have been declared along the east coast that is facing a bout of stormy weather over the last two days, local shipping sources have reported delays to vessel sailings and cargo flows across main gateways in the region, including Chennai, Tuticorin, Ennore and Kattupalli. “Terminals are operating at a slower pace due to challenging conditions,” said a Chennai-based ship agent. Weather has also been a major concern for supply chain and business stakeholders across Malaysia, Vietnam and Thailand, according to reports. “The floods have resulted in some road closures, likely impacting container traffic to and from Port Klang,” global forwarder Kuehne + Nagel said in a report. “As a result, there have been requests to extend the timeline for laden containers to be turned into the port.” Contact Bency Mathew at bencyvmathew@gmail.com.

Port News

Marine terminals

Severe storms swamp Southeast Asia supply chains, with Colombo hardest hit

<div class="phx-topic abstract-wrapper">The conflicting interests became apparent last week when the Suez Canal Authority issued a statement indicating that Maersk planned to resume normal transits in December, triggering a quick response from the carrier that no timeline had been set. </div>

The conflicting interests became apparent last week when the Suez Canal Authority issued a statement indicating that Maersk planned to resume normal transits in December, triggering a quick response from the carrier that no timeline had been set.

<div class="phx-topic">Geopolitical forces favoring the resumption of container trade through the Red Sea and the corresponding commercial reluctance to do so are converging after nearly two years of most ships diverting around southern Africa to avoid attacks by Houthi militants. The conflicting interests became apparent in late November when the Suez Canal Authority (SCA) issued a statement indicating that Maersk planned to resume normal transits in December, triggering a quick response from the carrier that no timeline had been set. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6126957_0.1.jpg"></img></div>But the contours of a clash are taking shape. Facing monthly losses of $800 million, Egypt President Abdel Fattah El-Sisi said earlier this year the country desperately wants full use of the canal to resume without further delay. After exerting little influence to reopen the Canal, Egypt saw fresh hope after the Oct. 13 Israel-Hamas peace summit in Sharm El-Sheikh, Egypt, attended by Sisi, US President Donald Trump and representatives of 20 countries. The SCA on Nov. 25 said the event “succeeded in paving the way for restoring the rates of traffic in the region back to normal.” Despite the pushback by Maersk and its Gemini partner Hapag-Lloyd, the peace conference was potentially significant regarding the Suez. The conference endorsed the October agreement between Hamas and Israel to end the war in Gaza, the hostilities that led the Houthis to start firing on shipping in late 2023. So, in theory, the end of active fighting between Israel and Hamas should end the attacks and fully reopen the waterway. But it’s not so simple. Mideast analysts have little confidence that hostilities have truly ended, and thus say the pause in attacks by the Houthis disclosed in early November is in fact not permanent. The tenuous nature of Mideast peace was reflected in ships failing to return to the Red Sea following a May announcement by Trump of a deal with the Houthis, under which the US would stop bombing the Iran-aligned group and the militants would stop menacing ships seeking to transit the Red Sea and Suez Canal. <h3>Carriers’ views are complex </h3>Carriers say they believe the Suez is the natural route connecting Asia and Europe. CMA CGM Egypt &amp; Sudan Cluster CEO Tariq Zaghloul was quoted by the Canal authority in early November saying “there is no alternative to the Suez.” But carriers are also disinclined to resume normal transits and perform extensive reworking of their networks, including transshipment points, only to have to re-divert if shipping were to come under renewed attack. Thus, in assessing the real situation, they have thus far concluded that not enough has changed to warrant resumption of normal routings between Asia and Europe and Asia and the North American East Coast. “The Houthi decision to pause attacks is probably a tactical decision to allow the group to rearm and rebuild damaged infrastructure,” Jack Kennedy, head of Middle East and North Africa country risk at S&amp;P Global Market Intelligence, wrote on Nov. 12 in an assessment he said is unchanged as of Nov. 26. “Although it reduces the likelihood of attacks on shipping while the Gaza ceasefire holds, there remains a severe risk of attacks on vessels in transit in the one-year outlook if, as is likely, the ceasefire between Hamas and Israel breaks down permanently without progressing to its later stages,” Kennedy said. There are reasons why it’s to the Houthi’s advantage to continue the attacks, he said. “The Houthi have incentive to continue some level of attack activity in the Red Sea and against Israel in the one-year outlook in order to secure external financial and military support and to continue to generate domestic support within Yemen,” Kennedy said. S&amp;P Global is the parent company of the Journal of Commerce. With the ongoing diversions serving as stark evidence that Mideast peace is tenuous, Egypt — in citing the peace conference as having cleared the way to normal transits — is hoping to draw a straight line between geopolitics and the ongoing diversions. And they are hoping the US draws the same line, seeing the issue in big picture terms and rejecting obstacles tied to the operational realities of shipping. “If the (Trump) administration links the canal disruption directly to their broader peace deal efforts in the Middle East, they could ramp up the regulatory or diplomatic playbook,” said Andrew Petrisin, who served as deputy assistant secretary for multimodal freight within the US Department of Transportation from June 2024 to January 2025 and is now CEO of Laneway, an online platform that enables the trading of guaranteed container space. Petrisin told the Journal of Commerce the White House, in an effort to pressure carriers to resume transits through the Suez, could try to frame the vessel diversions as causing rising costs for consumers. “If they decide that avoiding the Suez is driving inflation, given the recent election results and the focus on affordability, they may try to frame the carriers' safety decisions as raising prices,” Petrisin said. “Politically, this angle is an easier sell than a complex argument about how commercial shipping impacts a peace treaty.” Economists have previously told the Journal of Commerce they see no evidence in data that the diversions are impacting inflation in the US. Any effort to point the finger at ocean carriers would echo the Biden administration’s rhetoric blaming carriers for price gouging during the pandemic. <h3>US security guarantees? </h3>From the point of view of carriers, their reluctance to resume Suez transits remains high due to safety risks. The financial advantage of vessel diversions, never mentioned by carriers, is a consideration in the background given that resumption of Suez transits would dump around 10% of global capacity back into the market and soften freight rates, although the effect would be muted over several months by the extensive port congestion many believe would result from a massive realignment of East-West networks. “There are many pieces to fall in place before they can (resume Suez transits), and insurance is one factor,” said Patrick Fay, CEO of BOC International. Thus, according to industry sources, resuming Suez transits would likely require more than mere rhetoric from the US administration. For example, the US would likely have to put security guarantees in place beyond what it has already done, perhaps increasing its naval presence in the region, industry sources say. But that would run into a view expressed by Mideast analysts that the Houthis are too agile and dug in within Yemen to be eliminated as a military threat to shipping. And if efforts were made by the US to impose fines on carriers for not using the Suez, were it to come to that, carriers would resist, Petrisin believes. “I don't see a world where they risk the safety of their people and fleets for fear of a port fee,” he said. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Geopolitical forces favoring the resumption of container trade through the Red Sea and the corresponding commercial reluctance to do so are converging after nearly two years of most ships diverting around southern Africa to avoid attacks by Houthi militants. The conflicting interests became apparent in late November when the Suez Canal Authority (SCA) issued a statement indicating that Maersk planned to resume normal transits in December, triggering a quick response from the carrier that no timeline had been set. But the contours of a clash are taking shape. Facing monthly losses of $800 million, Egypt President Abdel Fattah El-Sisi said earlier this year the country desperately wants full use of the canal to resume without further delay. After exerting little influence to reopen the Canal, Egypt saw fresh hope after the Oct. 13 Israel-Hamas peace summit in Sharm El-Sheikh, Egypt, attended by Sisi, US President Donald Trump and representatives of 20 countries. The SCA on Nov. 25 said the event “succeeded in paving the way for restoring the rates of traffic in the region back to normal.” Despite the pushback by Maersk and its Gemini partner Hapag-Lloyd, the peace conference was potentially significant regarding the Suez. The conference endorsed the October agreement between Hamas and Israel to end the war in Gaza, the hostilities that led the Houthis to start firing on shipping in late 2023. So, in theory, the end of active fighting between Israel and Hamas should end the attacks and fully reopen the waterway. But it’s not so simple. Mideast analysts have little confidence that hostilities have truly ended, and thus say the pause in attacks by the Houthis disclosed in early November is in fact not permanent. The tenuous nature of Mideast peace was reflected in ships failing to return to the Red Sea following a May announcement by Trump of a deal with the Houthis, under which the US would stop bombing the Iran-aligned group and the militants would stop menacing ships seeking to transit the Red Sea and Suez Canal. Carriers’ views are complex Carriers say they believe the Suez is the natural route connecting Asia and Europe. CMA CGM Egypt & Sudan Cluster CEO Tariq Zaghloul was quoted by the Canal authority in early November saying “there is no alternative to the Suez.” But carriers are also disinclined to resume normal transits and perform extensive reworking of their networks, including transshipment points, only to have to re-divert if shipping were to come under renewed attack. Thus, in assessing the real situation, they have thus far concluded that not enough has changed to warrant resumption of normal routings between Asia and Europe and Asia and the North American East Coast. “The Houthi decision to pause attacks is probably a tactical decision to allow the group to rearm and rebuild damaged infrastructure,” Jack Kennedy, head of Middle East and North Africa country risk at S&P Global Market Intelligence, wrote on Nov. 12 in an assessment he said is unchanged as of Nov. 26. “Although it reduces the likelihood of attacks on shipping while the Gaza ceasefire holds, there remains a severe risk of attacks on vessels in transit in the one-year outlook if, as is likely, the ceasefire between Hamas and Israel breaks down permanently without progressing to its later stages,” Kennedy said. There are reasons why it’s to the Houthi’s advantage to continue the attacks, he said. “The Houthi have incentive to continue some level of attack activity in the Red Sea and against Israel in the one-year outlook in order to secure external financial and military support and to continue to generate domestic support within Yemen,” Kennedy said. S&P Global is the parent company of the Journal of Commerce. With the ongoing diversions serving as stark evidence that Mideast peace is tenuous, Egypt — in citing the peace conference as having cleared the way to normal transits — is hoping to draw a straight line between geopolitics and the ongoing diversions. And they are hoping the US draws the same line, seeing the issue in big picture terms and rejecting obstacles tied to the operational realities of shipping. “If the (Trump) administration links the canal disruption directly to their broader peace deal efforts in the Middle East, they could ramp up the regulatory or diplomatic playbook,” said Andrew Petrisin, who served as deputy assistant secretary for multimodal freight within the US Department of Transportation from June 2024 to January 2025 and is now CEO of Laneway, an online platform that enables the trading of guaranteed container space. Petrisin told the Journal of Commerce the White House, in an effort to pressure carriers to resume transits through the Suez, could try to frame the vessel diversions as causing rising costs for consumers. “If they decide that avoiding the Suez is driving inflation, given the recent election results and the focus on affordability, they may try to frame the carriers' safety decisions as raising prices,” Petrisin said. “Politically, this angle is an easier sell than a complex argument about how commercial shipping impacts a peace treaty.” Economists have previously told the Journal of Commerce they see no evidence in data that the diversions are impacting inflation in the US. Any effort to point the finger at ocean carriers would echo the Biden administration’s rhetoric blaming carriers for price gouging during the pandemic. US security guarantees? From the point of view of carriers, their reluctance to resume Suez transits remains high due to safety risks. The financial advantage of vessel diversions, never mentioned by carriers, is a consideration in the background given that resumption of Suez transits would dump around 10% of global capacity back into the market and soften freight rates, although the effect would be muted over several months by the extensive port congestion many believe would result from a massive realignment of East-West networks. “There are many pieces to fall in place before they can (resume Suez transits), and insurance is one factor,” said Patrick Fay, CEO of BOC International. Thus, according to industry sources, resuming Suez transits would likely require more than mere rhetoric from the US administration. For example, the US would likely have to put security guarantees in place beyond what it has already done, perhaps increasing its naval presence in the region, industry sources say. But that would run into a view expressed by Mideast analysts that the Houthis are too agile and dug in within Yemen to be eliminated as a military threat to shipping. And if efforts were made by the US to impose fines on carriers for not using the Suez, were it to come to that, carriers would resist, Petrisin believes. “I don't see a world where they risk the safety of their people and fleets for fear of a port fee,” he said. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Container lines

Asia-Europe

Complexity of resumption of Suez transits beginning to take shape

<div class="phx-topic abstract-wrapper">First-quarter charges will rise across all trade lanes that cover the European Union from Jan. 1, when carriers will be responsible for 100% of their carbon emissions. </div>

First-quarter charges will rise across all trade lanes that cover the European Union from Jan. 1, when carriers will be responsible for 100% of their carbon emissions.

<div class="phx-topic">The cost of ocean carriers complying with evolving European Union emissions regulations will rise significantly from Jan. 1, with some shipping companies advising cargo owners of increases in emissions surcharges in excess of 50%. From 2026, the EU Emissions Trading System (ETS) will require shipping lines to account for 100% of carbon emissions, up from 70% in 2025, as part of its phased rollout. Under the ETS “cap and trade” system, carriers must buy or receive allowances to cover their emissions. The average price of European Union Allowances (EUAs) over the three months to Nov. 15 were assessed by Maersk as €76.75 ($89.13). Based on that calculation, Maersk announced that from Jan. 1, its first-quarter “emissions surcharge” will rise across all trade lanes that cover the European Union, with increases on some trade lanes topping 50%. Among the Maersk trade lanes affected in the first quarter are Asia-North Europe, where ETS charges will rise from $114 to $168 per FEU; Asia to the Mediterranean from $80 to $130/FEU, the Mediterranean to North America from $151 to $236/FEU and North Europe to US from $89 to $139/FEU. Also increasing is the cost of compliance with the FuelEU Maritime regulation, under which carriers must gradually reduce the greenhouse gas intensity in fuels; those costs are included in the emissions surcharge. Maersk noted that FuelEU costs were up because rising biofuel costs combined with declining fossil fuel prices were making compliance more expensive. <h3>Direct impact on cost structure </h3>Maersk’s partner in the Gemini Cooperation alliance, Hapag-Lloyd, includes ETS and FuelEU costs in its EU ETS surcharge; the Hamburg-based carrier estimates the surcharge will rise 45% on Jan. 1. CMA CGM said in a customer advisory Monday it was anticipating a surcharge increase of 43%, with Europe’s 100% implementation of the ETS having a direct impact on its cost structure. The surcharges will be levied under CMA CGM’s “energy transition surcharge” and vary across different trade lanes involving European ports. For example, the ETS surcharge on Shanghai-Rotterdam in the first quarter will rise by almost $50 to $168/FEU from Jan. 1. Ocean Network Express (ONE) announced its “Europe environmental surcharge [EES]” that will increase from $134 to $186/FEU on Asia/Oceania to Europe trades, from $172 to $266/FEU on West Asia to the Mediterranean, and from $88 to $122/FEU on Europe-North America routes. On all bookings from China, excluding Hong Kong, the carriers will add ETS surcharges to the base freight rate for regulatory reasons; the same is true on bookings from Taiwan. “Instead of a surcharge, the EES portion will be incorporated and considered as a part of freight,” ONE said in its customer advisory. The carriers, in their customer advisories, used the surcharge-raising opportunity to market their lower emissions services that predominantly use biofuel under a “mass balance” approach that governs the chain of custody. Cargo moved under premium priced services such as Maersk’s ECO Delivery, Hapag-Lloyd's Ship Green or CMA CGM’s ACT+ can significantly reduce carbon emissions. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The cost of ocean carriers complying with evolving European Union emissions regulations will rise significantly from Jan. 1, with some shipping companies advising cargo owners of increases in emissions surcharges in excess of 50%. From 2026, the EU Emissions Trading System (ETS) will require shipping lines to account for 100% of carbon emissions, up from 70% in 2025, as part of its phased rollout. Under the ETS “cap and trade” system, carriers must buy or receive allowances to cover their emissions. The average price of European Union Allowances (EUAs) over the three months to Nov. 15 were assessed by Maersk as €76.75 ($89.13). Based on that calculation, Maersk announced that from Jan. 1, its first-quarter “emissions surcharge” will rise across all trade lanes that cover the European Union, with increases on some trade lanes topping 50%. Among the Maersk trade lanes affected in the first quarter are Asia-North Europe, where ETS charges will rise from $114 to $168 per FEU; Asia to the Mediterranean from $80 to $130/FEU, the Mediterranean to North America from $151 to $236/FEU and North Europe to US from $89 to $139/FEU. Also increasing is the cost of compliance with the FuelEU Maritime regulation, under which carriers must gradually reduce the greenhouse gas intensity in fuels; those costs are included in the emissions surcharge. Maersk noted that FuelEU costs were up because rising biofuel costs combined with declining fossil fuel prices were making compliance more expensive. Direct impact on cost structure Maersk’s partner in the Gemini Cooperation alliance, Hapag-Lloyd, includes ETS and FuelEU costs in its EU ETS surcharge; the Hamburg-based carrier estimates the surcharge will rise 45% on Jan. 1. CMA CGM said in a customer advisory Monday it was anticipating a surcharge increase of 43%, with Europe’s 100% implementation of the ETS having a direct impact on its cost structure. The surcharges will be levied under CMA CGM’s “energy transition surcharge” and vary across different trade lanes involving European ports. For example, the ETS surcharge on Shanghai-Rotterdam in the first quarter will rise by almost $50 to $168/FEU from Jan. 1. Ocean Network Express (ONE) announced its “Europe environmental surcharge [EES]” that will increase from $134 to $186/FEU on Asia/Oceania to Europe trades, from $172 to $266/FEU on West Asia to the Mediterranean, and from $88 to $122/FEU on Europe-North America routes. On all bookings from China, excluding Hong Kong, the carriers will add ETS surcharges to the base freight rate for regulatory reasons; the same is true on bookings from Taiwan. “Instead of a surcharge, the EES portion will be incorporated and considered as a part of freight,” ONE said in its customer advisory. The carriers, in their customer advisories, used the surcharge-raising opportunity to market their lower emissions services that predominantly use biofuel under a “mass balance” approach that governs the chain of custody. Cargo moved under premium priced services such as Maersk’s ECO Delivery, Hapag-Lloyd's Ship Green or CMA CGM’s ACT+ can significantly reduce carbon emissions. Contact Greg Knowler at greg.knowler@spglobal.com .

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<div class="phx-topic abstract-wrapper">The National Association of Waterfront Employers said intermodal service from ports could degrade further unless service commitments are made in the proposed $85 billion deal. </div>

The National Association of Waterfront Employers said intermodal service from ports could degrade further unless service commitments are made in the proposed $85 billion deal.

<div class="phx-topic">The National Association of Waterfront Employers (NAWE) became the first group in ocean freight to weigh in on the proposed merger of Union Pacific and Norfolk Southern, arguing a combined railroad could mean less competition and further erosion in intermodal service reliability at US ports.In a Dec. 1 letter to the US Surface Transportation Board (STB), NAWE said its members are concerned that reducing the number of Class I railroads through UP’s $85 billion acquisition of NS will further degrade intermodal service at ports. “Marine terminals need an intermodal rail service to handle increasing volumes of trade in order to provide streamlined imports and exports from increasingly strained port complexes,” NAWE’s letter said. “We are greatly concerned as to whether a reduction of two of the four major remaining competitors offering intermodal rail service will serve to benefit our industry.” NAWE, which represents marine terminals and stevedoring companies, said that Class I railroads, in general, are only taking a “best efforts” approach to providing intermodal service at ports. The group said the railroad industry’s focus on maintaining high operating ratios and “precision scheduled railroading” means less reliable intermodal service. Instead, railroads are leaving it to port operators and marine terminals to invest in rail operations “while the railroad usually takes more of an ‘if you build it, I may carry your cargo, if I see fit,’ approach,” NAWE’s letter said. “This results in a situation where the marine terminal industry finances and manages all the placement of intermodal on-dock rail transport, sometimes with very little in return on commitments in level of service,” the group wrote to STB, the federal regulator who will ultimately decide the fate of the proposed merger.<h3>Argues for intermodal growth at smaller ports</h3>Ocean carriers and ports have generally avoided public comments on the merger plans. NAWE said many of its members have good working relationships with the railroads, but it sees more potential for intermodal services to expand outside of larger ports by offering shippers more reach through less crowded gateways. The combination of two Class I railroads serving both coasts will further concentrate international intermodal freight at already busy ports, it said. “We need intermodal railroad services that expand the reach and capacity of medium-sized ports so they grow, but more fundamentally, we need to build a stronger business partnership with the railroads,” NAWE said. “Other port areas of the nation continue to struggle for commitment of service and greater level of investment to help spur growth.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

The National Association of Waterfront Employers (NAWE) became the first group in ocean freight to weigh in on the proposed merger of Union Pacific and Norfolk Southern, arguing a combined railroad could mean less competition and further erosion in intermodal service reliability at US ports. In a Dec. 1 letter to the US Surface Transportation Board (STB), NAWE said its members are concerned that reducing the number of Class I railroads through UP’s $85 billion acquisition of NS will further degrade intermodal service at ports. “Marine terminals need an intermodal rail service to handle increasing volumes of trade in order to provide streamlined imports and exports from increasingly strained port complexes,” NAWE’s letter said. “We are greatly concerned as to whether a reduction of two of the four major remaining competitors offering intermodal rail service will serve to benefit our industry.” NAWE, which represents marine terminals and stevedoring companies, said that Class I railroads, in general, are only taking a “best efforts” approach to providing intermodal service at ports. The group said the railroad industry’s focus on maintaining high operating ratios and “precision scheduled railroading” means less reliable intermodal service. Instead, railroads are leaving it to port operators and marine terminals to invest in rail operations “while the railroad usually takes more of an ‘if you build it, I may carry your cargo, if I see fit,’ approach,” NAWE’s letter said. “This results in a situation where the marine terminal industry finances and manages all the placement of intermodal on-dock rail transport, sometimes with very little in return on commitments in level of service,” the group wrote to STB, the federal regulator who will ultimately decide the fate of the proposed merger. Argues for intermodal growth at smaller ports Ocean carriers and ports have generally avoided public comments on the merger plans. NAWE said many of its members have good working relationships with the railroads, but it sees more potential for intermodal services to expand outside of larger ports by offering shippers more reach through less crowded gateways. The combination of two Class I railroads serving both coasts will further concentrate international intermodal freight at already busy ports, it said. “We need intermodal railroad services that expand the reach and capacity of medium-sized ports so they grow, but more fundamentally, we need to build a stronger business partnership with the railroads,” NAWE said. “Other port areas of the nation continue to struggle for commitment of service and greater level of investment to help spur growth.” Contact Michael Angell at michael.angell@spglobal.com .

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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

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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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