<div class="phx-topic abstract-wrapper">The global nature of the coronavirus outbreak is throwing containerized goods supply and demand out of whack, but a way through the fog for all parties could be to lean more heavily on predictive analytics software.</div>

The global nature of the coronavirus outbreak is throwing containerized goods supply and demand out of whack, but a way through the fog for all parties could be to lean more heavily on predictive analytics software.

3630141_FI.jpg

<div>Shippers, container lines, and forwarders grappling with the supply and demand effects of the coronavirus disease 2019 (COVID-19) are increasingly using technology to dynamically align their respective sides of the container equation, according to two providers of predictive analytics software.Taking the effect of withdrawn capacity for Lunar New Year in February in tandem with additional capacity removed due to blank sailings driven by the impacts of the coronavirus, Singapore-based shipping analytics startup Portcast estimates almost 950,000 TEU of capacity was removed in February from China to Europe alone. The company estimated the combined impact would cause a 75 to 80...

Shippers, container lines, and forwarders grappling with the supply and demand effects of the coronavirus disease 2019 (COVID-19) are increasingly using technology to dynamically align their respective sides of the container equation, according to two providers of predictive analytics software. Taking the effect of withdrawn capacity for Lunar New Year in February in tandem with additional capacity removed due to blank sailings driven by the impacts of the coronavirus, Singapore-based shipping analytics startup Portcast estimates almost 950,000 TEU of capacity was removed in February from China to Europe alone. The company estimated the combined impact would cause a 75 to 80 percent drop in container demand from China to Europe compared with the same month in 2019. Nidhi Gupta, co-founder and CEO of Portcast, said planning in real time can help container lines and forwarders avoid additional revenue losses due to low vessel utilization or delays in supply chains. “Being a black swan event, COVID-19 could obviously not have been predicted,” Gupta told JOC.com. “However, what we can do is dynamically quantify the impact on container shipping demand.” Portcast is subscription-based predictive software for carriers and forwarders to optimize internal operations and provide customers with information on delays or disruptions to their containerized supply chains. The company currently works with eight shipping lines and forwarders. Calling the supply side reductions “just the tip of the iceberg,” Gupta said the demand side is now the more problematic part to calculate for container lines and forwarders. She said reduced factory throughput in China will continue to affect demand negatively for March and April, pointing to the National Bureau of Statistics of China’s Purchasing Manufacturers Index (PMI), which has fallen to a 10-year low of 35.7 versus an average of 50 in recent years. “New orders, raw materials inventory, and employment indexes also show a steep fall,” Gupta said. “Similarly, the Supplier Delivery Time Index fell to 32.1 versus an average of roughly 50, indicating a considerable lengthening of supplier lead times. These numbers are even more severe than the 2008-09 financial crisis numbers for the PMI, showing the magnitude of the impact on domestic manufacturing in China.” Clearing the decks Gupta said Portcast estimates that additional blank sailings in March will lead to effective utilization of remaining container shipping supply, as shipping lines have already removed more than 250,000 TEU from China to Europe in March. “Considering that manufacturing is only starting to resume, the utilization for the remaining shipping supply is likely to come from the backlog of containers [delayed since the onset of the outbreak], rather than new production,” she said. She pointed to substantiating data from xChange, a German-based start-up focusing on the repositioning of containers, which is projecting a surplus of empty containers in Chinese ports and low availability in Europe and the United States will continue for 40-foot containers but will reduce for 20-foot containers in early March. Portcast assists shipping lines by using their internal data, such as customer shipping patterns, and external risk indicators to plan capacity utilization at each port across a service dynamically, six to eight weeks out. “Such dynamic estimates allow the shipping company to adjust the capacity across ports and improve overall load factor or pricing continuously,” Gupta said. “As this can be done six to eight weeks ahead, the [container line] can better decide if they require additional blank sailings or need to skip any port if the utilization is below the required threshold. This allows the shipping company to shift capacity from China to other ports in order to maximize the total load factor of the service.” Portcast is also assisting forwarders in preparing for delays in ocean freight movements dynamically, using vessel position and carrier schedules in tandem with data related to port performance and risks such as adverse weather, missed sailings, and rollovers. Gupta said Portcast data shows that carriers change shipping schedules an average of 2.5 times per voyage, an issue that’s exacerbated by events such as the coronavirus outbreak. Portcast’s platform integrates with forwarders’ transport management systems (TMSs) and control tower systems to feed dynamic visibility on container movements. She said forwarders and shipping lines can mitigate expected revenue losses by 3 to 5 percent using the technology. BCO ‘playbook’ Shippers are leveraging similar tools to predict when their cargo is likely to be delayed, rolled, or transshipped, said Adam Compain, CEO of San Francisco-based ClearMetal, which works with a number of BCOs. “The typical way to get to supply chain visibility is based on rules and averages, but that doesn’t hold up” during times of significant deviation from the norm, he said. “You can’t solve for a continuously evolving situation with a static way of doing this, whether using static data or the rules you established with carriers or forwarders a year prior. The core issue is that this is affecting shippers’ [service-level agreements] with their customers.” Compain said users of ClearMetal focus on two areas: dynamically determining the best plans for shipments and improving the customer experience using predictive estimated times of arrival. That customer may be a retailer awaiting the goods of an apparel maker or consumer packaged goods company, or it could be a manufacturer awaiting raw materials or components. For shippers, mitigating the impact of the coronavirus outbreak — similar to any major supply chain disruption — is “really about how to make sense of the data at hand,” he said. “Does this moment define our supply chain because everyone has to jump in to play detective? It’s less about having a crystal ball, and more about how responsive you are going to be, and what is the method to keep the customers up to date on where your stuff is.” Whether they’re dealing with a black swan event such as the coronavirus or business as usual, ClearMetal’s “playbook” for BCOs has four components, Compain said. “First is, what are the regions you care about; is it outbound out of China?” he said. “You create a filter so you have a live updating view, and proactively pushed alerts to whoever you care about as you look across your 22,000 containers around the world.” The second element is viewing the situation in the context of lead times and “customer promise dates,” the time by which a supplier has committed to have goods to the buyer. “For stuff that hasn’t moved, what right now is the most reliable mode, carrier, lane that we should be allocating shipments to, or reducing shipments to?” Shippers can also use ClearMetal’s planning-focused application programming interface (API) to feed information to a shipper’s customer relationship management (CRM) or enterprise resource planning (ERP) system to set up-to-date promise times to customers in those systems. The third component is a dashboard for specific types of delays and disruptions, and the fourth is a customer portal that lets ClearMetal users and related parties access the information directly. “The whole premise is, we can’t control the situation, but we can be better agents to our customers,” Compain said. Contact Eric Johnson at eric.johnson@ihsmarkit.com and follow him on Twitter: @LogTechEric .

Logistics Technology News

Container lines

Industry turning to analytics to navigate COVID-19 crisis

<div class="phx-topic abstract-wrapper">The ILWU is warning the state’s governor of political consequences, while maritime employers say the decision preserves the integrity of collective bargaining.</div>

The ILWU is warning the state’s governor of political consequences, while maritime employers say the decision preserves the integrity of collective bargaining.

Feature image

<div class="phx-topic">California Gov. Gavin Newsom’s refusal to sign a bill that would have effectively banned automation at the state’s ports “will undoubtedly lead to a loss of jobs,” the International Longshore and Warehouse Union (ILWU) said Tuesday. But maritime employers hailed Newsom’s decision, saying it “reinforces the integrity of collective bargaining” at West Coast ports. The bill, known as SB 34, <a href="https://www.joc.com/article/fate-of-future-automation-at-california-ports-in-governors-hands-6094241">would have banned automated or remotely operated cargo-handling equipment from plugging into the state’s power grid</a>. Newsom late Monday refused to sign the bill, in effect killing it. That means the collective bargaining process between the ILWU and the Pacific Maritime Association (PMA) — and not legislative proposals outside of the coastwide contract — will continue to determine the role of marine terminal automation at California’s ports. Robert Olvera Jr., ILWU international president, said the West Coast dockworkers’ union supports California’s attempts to reduce port-related emissions, but not at the sacrifice of longshore jobs. Olvera pulled no punches in saying Newsom’s decision will have political repercussions. “Make no mistake. Your veto of SB 34 has severely damaged our confidence to work together to achieve these goals, and it will take more than rhetoric to rebuild a partnership in the future,” Olvera said in a letter to the governor. PMA President Stephen Hennessey said in a letter to Newsom that by threatening the efficiencies inherent in automated container terminals, SB 34 would have made California’s ports less competitive. PMA represents shipping lines and terminal operators in negotiating the coastwide labor contract with the ILWU. “[Newsom’s] decision sends an important message to consumers, workers, farmers, small business owners and many others that strong, competitive ports are essential to California’s economy and its role in global trade,” Hennessey said in the letter. <h3>Coastwide contract defines process for terminal automation </h3>The 2008 ILWU-PMA contract defined the process by which individual PMA terminal operators that choose to do so can automate their facilities. In return, PMA agreed to an increase in wages and retirement benefits for all ILWU members coastwide. Long Beach Container Terminal and TraPac in Los Angeles have fully automated terminals, while APM Terminal in Los Angeles has automated 100 acres of its 400-acre terminal. Since the 2008 contract, the ILWU on several occasions has promoted restrictions on automation before <a href="https://www.joc.com/article/commission-vote-allows-apms-electrification-of-automation-5244491">port commissions, city councils and the state legislature</a> through environmental legislation and work-related issues in an attempt to circumvent the language in the contract. The Pacific Merchant Shipping Association (PMSA), which represents shipping lines and terminal operators on the West Coast on legislative and clean air initiatives, said that by using environmental issues as a vehicle for restricting automation, the ILWU’s actions actually threaten the effectiveness of the ports’ clean air efforts. PMSA President Mike Jacob noted that the ports of Los Angeles and Long Beach recently reached an agreement with the South Coast Air Quality Management District (AQMD) to work cooperatively to advance clean air initiatives that the AQMD had proposed in its <a href="https://www.joc.com/article/la-lb-likely-to-work-with-regulator-on-emissions-cutting-plan-for-ports-6084550">port Indirect Source Rule.</a> While the ILWU says it supports environmental efforts at the port, Jacob said stifling automation was the union’s real intention in promoting and supporting SB 34. “This is ILWU’s priority bill,” he said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.</div>

California Gov. Gavin Newsom’s refusal to sign a bill that would have effectively banned automation at the state’s ports “will undoubtedly lead to a loss of jobs,” the International Longshore and Warehouse Union (ILWU) said Tuesday. But maritime employers hailed Newsom’s decision, saying it “reinforces the integrity of collective bargaining” at West Coast ports. The bill, known as SB 34, would have banned automated or remotely operated cargo-handling equipment from plugging into the state’s power grid . Newsom late Monday refused to sign the bill, in effect killing it. That means the collective bargaining process between the ILWU and the Pacific Maritime Association (PMA) — and not legislative proposals outside of the coastwide contract — will continue to determine the role of marine terminal automation at California’s ports. Robert Olvera Jr., ILWU international president, said the West Coast dockworkers’ union supports California’s attempts to reduce port-related emissions, but not at the sacrifice of longshore jobs. Olvera pulled no punches in saying Newsom’s decision will have political repercussions. “Make no mistake. Your veto of SB 34 has severely damaged our confidence to work together to achieve these goals, and it will take more than rhetoric to rebuild a partnership in the future,” Olvera said in a letter to the governor. PMA President Stephen Hennessey said in a letter to Newsom that by threatening the efficiencies inherent in automated container terminals, SB 34 would have made California’s ports less competitive. PMA represents shipping lines and terminal operators in negotiating the coastwide labor contract with the ILWU. “[Newsom’s] decision sends an important message to consumers, workers, farmers, small business owners and many others that strong, competitive ports are essential to California’s economy and its role in global trade,” Hennessey said in the letter. Coastwide contract defines process for terminal automation The 2008 ILWU-PMA contract defined the process by which individual PMA terminal operators that choose to do so can automate their facilities. In return, PMA agreed to an increase in wages and retirement benefits for all ILWU members coastwide. Long Beach Container Terminal and TraPac in Los Angeles have fully automated terminals, while APM Terminal in Los Angeles has automated 100 acres of its 400-acre terminal. Since the 2008 contract, the ILWU on several occasions has promoted restrictions on automation before port commissions, city councils and the state legislature through environmental legislation and work-related issues in an attempt to circumvent the language in the contract. The Pacific Merchant Shipping Association (PMSA), which represents shipping lines and terminal operators on the West Coast on legislative and clean air initiatives, said that by using environmental issues as a vehicle for restricting automation, the ILWU’s actions actually threaten the effectiveness of the ports’ clean air efforts. PMSA President Mike Jacob noted that the ports of Los Angeles and Long Beach recently reached an agreement with the South Coast Air Quality Management District (AQMD) to work cooperatively to advance clean air initiatives that the AQMD had proposed in its port Indirect Source Rule. While the ILWU says it supports environmental efforts at the port, Jacob said stifling automation was the union’s real intention in promoting and supporting SB 34. “This is ILWU’s priority bill,” he said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .

Port News

Transport, Trade and Regulation News

North American ports

Marine terminals

Maritime

Stakeholders differ on Newsom’s move to kill automation ban at California ports

<div class="phx-topic abstract-wrapper">But the move comes as China’s Transport Ministry launched an investigation into how the country’s maritime industry and supply chains will be impacted by the US Trade Representative’s Section 301 port charges and tariffs.</div>

But the move comes as China’s Transport Ministry launched an investigation into how the country’s maritime industry and supply chains will be impacted by the US Trade Representative’s Section 301 port charges and tariffs.

<div class="phx-topic">China will exempt US-flag ships built in China from its new port fees that went into effect Tuesday, even as the first two Chinese-operated vessels were slapped with new fees in the US. The concession by Beijing will come as a relief to Matson and APL, both of which are US-flagged and operate China-built vessels. Maersk Line Ltd., the other major US-flag carrier, doesn’t regularly serve Chinese ports. The US port fees heavily target Cosco, its subsidiary OOCL and Hede Shipping, while also giving non-Chinese operators a way to mostly avoid the charges by substituting China-built ships on US services with vessels built in South Korea, Japan and Taiwan. The change in China’s port fees comes as the country’s Transport Ministry on Tuesday launched an investigation into how its maritime industry and supply chains will be impacted by the US Trade Representative’s (USTR’s) Section 301 port charges and tariffs. Significantly, the probe will also investigate any organizations and individuals that assisted or supported USTR’s “discriminatory restrictive measures against our country in the shipping industry, shipbuilding industry and related industrial and supply chains,” the ministry said. Beijing announced its investigation of the USTR activities on the same day the US and China imposed reciprocal port call charges on each other’s vessels and owners. The US is charging Chinese-owned or -operated vessels $50 per net ton on each initial port call subject to a cap of five port calls a year. Foreign owners and operators of China-built vessels are being charged the higher of either $18 per net ton or $120 per discharged container. The rates will increase next April. China, in turn, is levying a fee of $56 per net ton on non-China-made vessels that are US-flagged or owned or controlled by US companies or companies where more than 25% shares are held by US interests. <h3>Two China-operated ships hit with US port fees </h3>Meanwhile, the first two Chinese-operated ships to be subjected to US fees called at US ports Tuesday. The OOCL Sunflower, a 16,828-TEU vessel, called Long Beach, while the 13,800-TEU Cosco Jasmine arrived in Savannah, according to Sea-web, a sister product of the Journal of Commerce within S&amp;P Global. The other 14 container ships to call US ports on the day the new fees went into effect were excluded because they were under 4,000 TEUs or were US-flagged. Steel unions that in March 2024 triggered the USTR investigation into China’s maritime industry celebrated the new US ports fees and urged the White House to provide more support to the industry. “Revitalizing shipbuilding and the supply chain will yield hundreds of thousands of jobs and strengthen our national defense and our industrial base,” the United Steelworkers and International Association of Machinists said in a statement. But a group of apparel shippers was less enthused, saying that while it supported US shipbuilding, the new fees could prompt ocean carriers to levy surcharges to recoup their costs. “Instead of imposing punitive port fees that create inefficiencies and divert business away from US ports, the focus should be on creating strong domestic incentives and providing sustained support to revitalize American shipbuilding,” Audrey Clark, trade and transportation specialist for the American Apparel &amp; Footwear Association, said in a statement. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

China will exempt US-flag ships built in China from its new port fees that went into effect Tuesday, even as the first two Chinese-operated vessels were slapped with new fees in the US. The concession by Beijing will come as a relief to Matson and APL, both of which are US-flagged and operate China-built vessels. Maersk Line Ltd., the other major US-flag carrier, doesn’t regularly serve Chinese ports. The US port fees heavily target Cosco, its subsidiary OOCL and Hede Shipping, while also giving non-Chinese operators a way to mostly avoid the charges by substituting China-built ships on US services with vessels built in South Korea, Japan and Taiwan. The change in China’s port fees comes as the country’s Transport Ministry on Tuesday launched an investigation into how its maritime industry and supply chains will be impacted by the US Trade Representative’s (USTR’s) Section 301 port charges and tariffs. Significantly, the probe will also investigate any organizations and individuals that assisted or supported USTR’s “discriminatory restrictive measures against our country in the shipping industry, shipbuilding industry and related industrial and supply chains,” the ministry said. Beijing announced its investigation of the USTR activities on the same day the US and China imposed reciprocal port call charges on each other’s vessels and owners. The US is charging Chinese-owned or -operated vessels $50 per net ton on each initial port call subject to a cap of five port calls a year. Foreign owners and operators of China-built vessels are being charged the higher of either $18 per net ton or $120 per discharged container. The rates will increase next April. China, in turn, is levying a fee of $56 per net ton on non-China-made vessels that are US-flagged or owned or controlled by US companies or companies where more than 25% shares are held by US interests. Two China-operated ships hit with US port fees Meanwhile, the first two Chinese-operated ships to be subjected to US fees called at US ports Tuesday. The OOCL Sunflower, a 16,828-TEU vessel, called Long Beach, while the 13,800-TEU Cosco Jasmine arrived in Savannah, according to Sea-web, a sister product of the Journal of Commerce within S&P Global. The other 14 container ships to call US ports on the day the new fees went into effect were excluded because they were under 4,000 TEUs or were US-flagged. Steel unions that in March 2024 triggered the USTR investigation into China’s maritime industry celebrated the new US ports fees and urged the White House to provide more support to the industry. “Revitalizing shipbuilding and the supply chain will yield hundreds of thousands of jobs and strengthen our national defense and our industrial base,” the United Steelworkers and International Association of Machinists said in a statement. But a group of apparel shippers was less enthused, saying that while it supported US shipbuilding, the new fees could prompt ocean carriers to levy surcharges to recoup their costs. “Instead of imposing punitive port fees that create inefficiencies and divert business away from US ports, the focus should be on creating strong domestic incentives and providing sustained support to revitalize American shipbuilding,” Audrey Clark, trade and transportation specialist for the American Apparel & Footwear Association, said in a statement. Contact Keith Wallis at keithwallis@hotmail.com .

Trans-Pacific

Beijing exempts US-flag vessels built in China from retaliatory port fees

<div class="phx-topic abstract-wrapper">But it will take several months of sustained peace before liners are confident enough of safe passage to redirect mainline services through the Suez Canal, according to an HSBC report.</div>

But it will take several months of sustained peace before liners are confident enough of safe passage to redirect mainline services through the Suez Canal, according to an HSBC report.

<div class="phx-topic">Two ocean carriers have expanded services in the Red Sea just days after a ceasefire was declared in Gaza between Israel and Hamas, but most liners will not be in a hurry to return to the at-times perilous route, according to one global bank. The expanded services of both CMA CGM and SeaLead pass through the narrow Bab al-Mandab Strait at the southern end of the Red Sea that is controlled by Houthi militants who have been attacking commercial shipping in support of Palestinians in Gaza since late 2023. A new routing structure by SeaLead’s revamped Five Seas Express (5CX) service will be launched on Oct. 27 offering weekly sailings via the Suez Canal connecting China, Egypt, Turkey, Saudi Arabia and Malaysia. The port rotation covers Qingdao, Shanghai, Ningbo, Nansha, Alexandria, Aliaga, Istanbul, Mersin, Jeddah and Port Klang before returning to Qingdao. “With weekly sailings and a time-saving route, the revamped service offers faster, more reliable, and efficient shipping solutions,” Kadir Oruc, regional managing director for Europe and the Mediterranean at SeaLead, said in a statement. CMA CGM told customers in an advisory Tuesday it was upgrading its REX2 service this month to offer expanded direct coverage between China and the Red Sea that would provide weekly sailings and faster transit times. New direct calls will be added at Qingdao and Aqaba in Jordan, with the double calls at Saudi Arabia’s Red Sea hub of Jeddah. The port rotation will be Qingdao, Shanghai, Ningbo, Shekou, Nansha, Singapore, Djibouti, Jeddah, Sokhna, Aqaba, Jeddah and Qingdao. The revamped service does not pass through the Suez. <h3>Carriers to practice caution </h3>The first phase of the Gaza truce took effect Oct. 9, and while a return to the Red Sea was expected at some point, carriers will remain cautious over whether the ceasefire will hold before they redirect mainline services through the Suez, HSBC said in a research report Monday. “In our view, liners will require a period of up to several months to feel confident that safe passage is fully restored before returning to the route,” HSBC said. “We think the ceasefire remains a key risk. A potential breakdown in the truce could lead to a resurgence of Red Sea attacks and further delay the return to the Red Sea.” The threat of attacks by the Houthis has forced carriers to divert around southern Africa since late 2023, adding significant time to journeys and pulling an estimated 7% of global capacity from the market. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Two ocean carriers have expanded services in the Red Sea just days after a ceasefire was declared in Gaza between Israel and Hamas, but most liners will not be in a hurry to return to the at-times perilous route, according to one global bank. The expanded services of both CMA CGM and SeaLead pass through the narrow Bab al-Mandab Strait at the southern end of the Red Sea that is controlled by Houthi militants who have been attacking commercial shipping in support of Palestinians in Gaza since late 2023. A new routing structure by SeaLead’s revamped Five Seas Express (5CX) service will be launched on Oct. 27 offering weekly sailings via the Suez Canal connecting China, Egypt, Turkey, Saudi Arabia and Malaysia. The port rotation covers Qingdao, Shanghai, Ningbo, Nansha, Alexandria, Aliaga, Istanbul, Mersin, Jeddah and Port Klang before returning to Qingdao. “With weekly sailings and a time-saving route, the revamped service offers faster, more reliable, and efficient shipping solutions,” Kadir Oruc, regional managing director for Europe and the Mediterranean at SeaLead, said in a statement. CMA CGM told customers in an advisory Tuesday it was upgrading its REX2 service this month to offer expanded direct coverage between China and the Red Sea that would provide weekly sailings and faster transit times. New direct calls will be added at Qingdao and Aqaba in Jordan, with the double calls at Saudi Arabia’s Red Sea hub of Jeddah. The port rotation will be Qingdao, Shanghai, Ningbo, Shekou, Nansha, Singapore, Djibouti, Jeddah, Sokhna, Aqaba, Jeddah and Qingdao. The revamped service does not pass through the Suez. Carriers to practice caution The first phase of the Gaza truce took effect Oct. 9, and while a return to the Red Sea was expected at some point, carriers will remain cautious over whether the ceasefire will hold before they redirect mainline services through the Suez, HSBC said in a research report Monday. “In our view, liners will require a period of up to several months to feel confident that safe passage is fully restored before returning to the route,” HSBC said. “We think the ceasefire remains a key risk. A potential breakdown in the truce could lead to a resurgence of Red Sea attacks and further delay the return to the Red Sea.” The threat of attacks by the Houthis has forced carriers to divert around southern Africa since late 2023, adding significant time to journeys and pulling an estimated 7% of global capacity from the market. Contact Greg Knowler at greg.knowler@spglobal.com .

Asia-Europe

Container Shipping News

CMA CGM, SeaLead revamp Red Sea sailings after Gaza truce

<div class="phx-topic abstract-wrapper">IMO member states should focus on the substance of the proposed net-zero framework and not on opposition to the measures, was Secretary-General Arsenio Dominguez’s message as the four-day session got underway.</div>

IMO member states should focus on the substance of the proposed net-zero framework and not on opposition to the measures, was Secretary-General Arsenio Dominguez’s message as the four-day session got underway.

<div class="phx-topic">Member states of the International Maritime Organization (IMO) gathered in London Tuesday to begin four days of meetings meant to finalize the adoption of far-reaching decarbonization plans that have sharply divided nations and sectors within the shipping industry. While Secretary-General Arsenio Dominguez acknowledged the “high stakes” nature of this week’s session of the IMO’s Marine Environment Protection Committee (MEPC), he refused to be drawn on <a href="https://www.joc.com/article/white-house-sanctions-threat-ups-ante-ahead-of-pivotal-imo-meeting-6096646">Washington’s increasingly aggressive opposition to the “net-zero framework”</a> of measures that include a pricing mechanism and a fuel standard. “We are here to finalize the adoption of the net-zero framework,” Dominguez told reporters at IMO’s London headquarters. “Every country has the right to express their opinion, and the IMO will always engage with them.” Asked what the next step would be should the net-zero framework fail to be adopted this week, Dominguez declined to speculate, emphasizing the IMO’s commitment to engaging all 176 member states and organizations despite differing opinions. “The IMO is working on behalf of the member states to reach adoption,” he said. “We understand the magnitude of the work we are doing, but my message is that we have had these discussions for many years, and I would encourage member states to focus on what we have in front of us.” Among US threats made last week were the imposition of sanctions on officials “sponsoring activist-driven climate policies that would burden American consumers.” The Trump administration has also threatened to impose visa restrictions and revise maritime crew visas quotas, and impose additional port fees on ships owned, operated or flagged by countries supporting the net-zero framework. The White House also said flag states supporting the IMO measures may have their registered vessels blocked from calling US ports, with the US also evaluating the imposition of financial penalties on the flag states. <h3>A path toward net-zero emissions </h3>The net-zero framework includes a package of technical and economic elements that puts the sector on a transition path to net-zero emissions by 2050. They include a global fuel standard that sets greenhouse gas intensity reduction targets for each year through 2035 and penalties for failing to meet them. It also establishes a credit trading scheme through which vessels with lower emissions can generate credits to sell to owners of higher-emissions vessels. Revenues generated by the penalties will fund a reward mechanism for zero- and near-zero emission fuels and support “a just and equitable transition.” IMO’s plenary session on Tuesday featured member states reiterating their positions, with support led by the European Union and Pacific Islands and opposition led by the US delegation that stated the net-zero framework was a thinly disguised carbon tax and an environmental “slush fund.” “There will be a lot of theatrics this week, but there is real optimism in the room that we will still be able to adopt the measures by the end of the week,” one delegate said. <h3>US threats are ‘unjust’ </h3>Not everyone shared the delegate’s sunny viewpoint. Rico Luman, senior economist for transport, logistics and automotive at global bank ING, said the US threat of retaliatory tariffs on countries supporting the IMO measure cast “significant uncertainty” over the outcome of the MEPC session. “The US is clearly pressuring other member states to reject the agreement and is threatening retaliatory tariffs,” Luman told the Journal of Commerce Tuesday. “This essentially amounts to coercing countries into aligning with its position, which is unjust.” Luman noted that in April there was a clear majority in favor of the net-zero framework among IMO member nations, as well as from container carriers, major ports and shipping associations such as BIMCO, the International Chamber of Shipping (ICS) and the World Shipping Council (WSC). “It would be a major setback if [US threats] derail the adoption and implementation of the new climate strategy, which was intended to be a global breakthrough and a replacement for fragmented regional initiatives,” he said. Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce contributor, questioned the wisdom behind the retaliatory measures outlined by Washington that he said would penalize US supply chains. “Similar to the continuing wrongful claim that foreign countries are paying [US] tariffs, the [threats] from the US State Department promote the view that these penalties on shipping will be paid by the countries voting ‘yes,’” Jensen <a href="https://www.linkedin.com/in/larsjensenvespuccimaritime/recent-activity/all/">wrote in a LinkedIn post</a>. “But imposing fees or restrictions on ships or shipping will merely increase the cost of shipping to and from the US and hence place the financial cost on the US exporters and importers,” he added. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Member states of the International Maritime Organization (IMO) gathered in London Tuesday to begin four days of meetings meant to finalize the adoption of far-reaching decarbonization plans that have sharply divided nations and sectors within the shipping industry. While Secretary-General Arsenio Dominguez acknowledged the “high stakes” nature of this week’s session of the IMO’s Marine Environment Protection Committee (MEPC), he refused to be drawn on Washington’s increasingly aggressive opposition to the “net-zero framework” of measures that include a pricing mechanism and a fuel standard. “We are here to finalize the adoption of the net-zero framework,” Dominguez told reporters at IMO’s London headquarters. “Every country has the right to express their opinion, and the IMO will always engage with them.” Asked what the next step would be should the net-zero framework fail to be adopted this week, Dominguez declined to speculate, emphasizing the IMO’s commitment to engaging all 176 member states and organizations despite differing opinions. “The IMO is working on behalf of the member states to reach adoption,” he said. “We understand the magnitude of the work we are doing, but my message is that we have had these discussions for many years, and I would encourage member states to focus on what we have in front of us.” Among US threats made last week were the imposition of sanctions on officials “sponsoring activist-driven climate policies that would burden American consumers.” The Trump administration has also threatened to impose visa restrictions and revise maritime crew visas quotas, and impose additional port fees on ships owned, operated or flagged by countries supporting the net-zero framework. The White House also said flag states supporting the IMO measures may have their registered vessels blocked from calling US ports, with the US also evaluating the imposition of financial penalties on the flag states. A path toward net-zero emissions The net-zero framework includes a package of technical and economic elements that puts the sector on a transition path to net-zero emissions by 2050. They include a global fuel standard that sets greenhouse gas intensity reduction targets for each year through 2035 and penalties for failing to meet them. It also establishes a credit trading scheme through which vessels with lower emissions can generate credits to sell to owners of higher-emissions vessels. Revenues generated by the penalties will fund a reward mechanism for zero- and near-zero emission fuels and support “a just and equitable transition.” IMO’s plenary session on Tuesday featured member states reiterating their positions, with support led by the European Union and Pacific Islands and opposition led by the US delegation that stated the net-zero framework was a thinly disguised carbon tax and an environmental “slush fund.” “There will be a lot of theatrics this week, but there is real optimism in the room that we will still be able to adopt the measures by the end of the week,” one delegate said. US threats are ‘unjust’ Not everyone shared the delegate’s sunny viewpoint. Rico Luman, senior economist for transport, logistics and automotive at global bank ING, said the US threat of retaliatory tariffs on countries supporting the IMO measure cast “significant uncertainty” over the outcome of the MEPC session. “The US is clearly pressuring other member states to reject the agreement and is threatening retaliatory tariffs,” Luman told the Journal of Commerce Tuesday. “This essentially amounts to coercing countries into aligning with its position, which is unjust.” Luman noted that in April there was a clear majority in favor of the net-zero framework among IMO member nations, as well as from container carriers, major ports and shipping associations such as BIMCO, the International Chamber of Shipping (ICS) and the World Shipping Council (WSC). “It would be a major setback if [US threats] derail the adoption and implementation of the new climate strategy, which was intended to be a global breakthrough and a replacement for fragmented regional initiatives,” he said. Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce contributor, questioned the wisdom behind the retaliatory measures outlined by Washington that he said would penalize US supply chains. “Similar to the continuing wrongful claim that foreign countries are paying [US] tariffs, the [threats] from the US State Department promote the view that these penalties on shipping will be paid by the countries voting ‘yes,’” Jensen wrote in a LinkedIn post . “But imposing fees or restrictions on ships or shipping will merely increase the cost of shipping to and from the US and hence place the financial cost on the US exporters and importers,” he added. Contact Greg Knowler at greg.knowler@spglobal.com .

‘High stakes’ IMO decarbonization meeting begins in London

<div class="phx-topic abstract-wrapper">The persistent pressure on India-Europe rates comes despite sporadic capacity cuts implemented by major carriers. </div>

The persistent pressure on India-Europe rates comes despite sporadic capacity cuts implemented by major carriers.

<div class="phx-topic">Ocean freight yields are rapidly eroding for container lines working on the India-Europe trade lane due to volatile market conditions, industry sources say, with freight-all-kinds (FAK) rates nearly halving since early September. Local freight forwarder sources who spoke with the Journal of Commerce put average FAK quotes from major carriers for bookings from Nhava Sheva to Felixstowe/Rotterdam at $900 to $1,000 per TEU and $1,000 to $1,100 per FEU. That’s down from <a href="https://www.joc.com/article/india-europe-liners-lower-rates-as-capacity-normalizes-amid-little-peak-demand-signs-6076154">$1,600 to $1,800 per TEU/FEU six weeks ago</a>. Sources also said carriers are constantly adjusting spot booking rates to push cargo lifts as close as possible to their westbound space allocations. “Cargo bookings are tight, so pricing has become a sales tool for carriers,” said an executive at a Mumbai forwarding house who didn’t want to be identified. “Asian carriers, such as Cosco Shipping and Ocean Network Express (ONE), have been even more aggressive in attempting to fill their slot space.” <h3>Capacity overhang worsens </h3>The persistent pressure on India-Europe rates comes despite sporadic capacity cuts implemented by major carriers. A week 41 West India call voided by CMA CGM’s “Epic” service was one recent example. Still, the capacity overhang plaguing the market seems to have worsened in October with fewer sailing disruptions reported relative to the past months, on top of extra space positioned by some India-US East Coast networks via transshipment. In addition to CMA CGM expanding its “Indamex” rotation with a stop at Tangier in Morocco for such cargo relays, Mediterranean Shipping Co. has also been using its India-USEC sailings to connect shipments destined for the Europe/Mediterranean region via ad hoc calls at Lome in Togo. MSC has developed the West African hub on the back of container terminal rights held there by its Terminal Investment Limited (TiL) subsidiary. “The last Indamex voyage [the Belita] lifted about 1,300 TEUs of cargo for North Europe,” a terminal executive in Nhava Sheva told the Journal of Commerce. “This US tariff-linked strategy is also weighing on the market.” Forwarders generally do not expect any sort of volume gains on the India-Europe/Mediterranean trades in the near term for carriers to prop up rates. “Indian exporters have almost finished holiday season shipments, so the westbound trade is moving into the traditional slack period,” a second forwarder source said. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

Ocean freight yields are rapidly eroding for container lines working on the India-Europe trade lane due to volatile market conditions, industry sources say, with freight-all-kinds (FAK) rates nearly halving since early September. Local freight forwarder sources who spoke with the Journal of Commerce put average FAK quotes from major carriers for bookings from Nhava Sheva to Felixstowe/Rotterdam at $900 to $1,000 per TEU and $1,000 to $1,100 per FEU. That’s down from $1,600 to $1,800 per TEU/FEU six weeks ago . Sources also said carriers are constantly adjusting spot booking rates to push cargo lifts as close as possible to their westbound space allocations. “Cargo bookings are tight, so pricing has become a sales tool for carriers,” said an executive at a Mumbai forwarding house who didn’t want to be identified. “Asian carriers, such as Cosco Shipping and Ocean Network Express (ONE), have been even more aggressive in attempting to fill their slot space.” Capacity overhang worsens The persistent pressure on India-Europe rates comes despite sporadic capacity cuts implemented by major carriers. A week 41 West India call voided by CMA CGM’s “Epic” service was one recent example. Still, the capacity overhang plaguing the market seems to have worsened in October with fewer sailing disruptions reported relative to the past months, on top of extra space positioned by some India-US East Coast networks via transshipment. In addition to CMA CGM expanding its “Indamex” rotation with a stop at Tangier in Morocco for such cargo relays, Mediterranean Shipping Co. has also been using its India-USEC sailings to connect shipments destined for the Europe/Mediterranean region via ad hoc calls at Lome in Togo. MSC has developed the West African hub on the back of container terminal rights held there by its Terminal Investment Limited (TiL) subsidiary. “The last Indamex voyage [the Belita] lifted about 1,300 TEUs of cargo for North Europe,” a terminal executive in Nhava Sheva told the Journal of Commerce. “This US tariff-linked strategy is also weighing on the market.” Forwarders generally do not expect any sort of volume gains on the India-Europe/Mediterranean trades in the near term for carriers to prop up rates. “Indian exporters have almost finished holiday season shipments, so the westbound trade is moving into the traditional slack period,” a second forwarder source said. Contact Bency Mathew at bencyvmathew@gmail.com .

Downward shift in India-Europe ocean rates intensifies amid market volatility

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

Explore today’s cutting-edge global logistics technology news and analysis by the Journal of Commerce. Coverage includes logistics technology startups, logistics technology solutions, venture capital, management and impact, freight forwarder technology and the latest supply chain and logistics technology.

Our logistics technology news include logistics technology startups, solutions, and the impact of technology on logistics and supply chain management.

Logistics Technology News | Journal of Commerce

The Journal of Commerce’s supply chain news and analysis impacting the management of end-to-end supply chains reports on supply chain strategies, cargo visibility, inventory trends, sourcing, customs certification and contract logistics. Supply chain news coverage also delves into refrigerated shipping advancements and management of inventory status, regulatory updates and government funding projects.

Stay informed with the latest regulation news and trade updates. Explore comprehensive transportation news and trade regulations today.

Transport, Trade and Regulation News | Journal of Commerce

A thorough cool cargoes news by Journal of Commerce. Learn about the latest trends in refrigerated cargo transportation, weight capacity, technology, and more.

Cool Cargo News | Journal of Commerce

Cool Cargo News

Journal of Commerce keeps you informed on the latest last mile news with comprehensive coverage of carriers, logistics, and last mile transportation solutions.

Last Mile News | Journal of Commerce

Last Mile News

Discover the latest industrial real estate news and trends. Covering projects, real estate supply chain, logistics, pricing, cross dock facilities, and more.

Industrial Real Estate News | Journal of Commerce

Industrial Real Estate News

Stay updated on supply chain strategies, cargo visibility, inventory trends and more with our comprehensive supply chain news and analysis.

Latest News

More News & Analysis

Stakeholders differ on Newsom’s move to kill automation ban at California ports

Beijing exempts US-flag vessels built in China from retaliatory port fees

CMA CGM, SeaLead revamp Red Sea sailings after Gaza truce