<div class="phx-topic abstract-wrapper">The recent wobbles of WeWork connect to the forwarder Flexport, which shares the same primary investor, but also might be constrained to grow in the way a pure software provider does.
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The recent wobbles of WeWork connect to the forwarder Flexport, which shares the same primary investor, but also might be constrained to grow in the way a pure software provider does.

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<div>When the valuation of the much-hyped co-working lease space provider WeWork cratered from $47 billion in early 2019 to below $10 billion in mid-October as its initial public offering (IPO) was suspended and its founder and CEO ousted, it shined a light on an issue larger than just the fortunes of one formerly heralded startup.It called into question whether WeWork’s biggest venture capital (VC) backer, SoftBank, with a total investment greater than $10 billion, was properly valuing the companies into which it was investing. And, in the context of container shipping and logistics, that leads the conversation directly to Flexport,...

When the valuation of the much-hyped co-working lease space provider WeWork cratered from $47 billion in early 2019 to below $10 billion in mid-October as its initial public offering (IPO) was suspended and its founder and CEO ousted, it shined a light on an issue larger than just the fortunes of one formerly heralded startup. It called into question whether WeWork’s biggest venture capital (VC) backer, SoftBank, with a total investment greater than $10 billion, was properly valuing the companies into which it was investing. And, in the context of container shipping and logistics, that leads the conversation directly to Flexport, the San Francisco-based forwarder that secured a $1 billion funding round in February led by SoftBank, by far the largest VC investment into the transportation and logistics market. SoftBank valued Flexport at $3.2 billion seven months ago. The question, in the wake of what many financial analysts see as a missed valuation of WeWork (not to mention another SoftBank investment, Uber), is whether that valuation will grow, stagnate, or shrink. Valuation in a pre-IPO stage, in the absence of a public share price, is the value of the investors’ stakes in the business. Valuation parlor game It can seem like valuations of young companies are a parlor game more than anything based on fundamentals, but where Flexport’s valuation goes from here has actual consequences in terms of where the company goes, and by extension how it will serve customers. Flexport, as the most heavily venture capital-backed company in logistics industry history, is the bellwether for the broader group of VC-backed companies to have entered the space in the last decade. A Flexport spokesperson told JOC.com in mid-October that the company chose the SoftBank Vision Fund “because they recognize our long-term vision and the capital required to reach it. Our job now is to serve customers with a wide array of tech-enabled freight forwarding services and to live up to the promise we made to our employees and investors. That’s our focus as a company." According to venture capitalists and equity analysts who spoke to JOC.com on background, Flexport essentially has four near-term paths as its options: raise more venture capital; go public; sit tight and use existing fundraising to enable expansion; or seek to be acquired. The specter of a lower valuation for Flexport (if SoftBank’s misses on WeWork and Uber bleed into its other investments) would affect the forwarder’s fundraising efforts or any plans it has to go public. Flexport could be faced with what’s known as a down round, or a financing round at a lower valuation than its preceding round. Each share in the company would be less expensive, and therefore the investors could take a larger portion of the company (known as dilution) than they would have if the valuation had increased from the previous round. It’s more than just the implications of WeWork’s diminished valuation and the venture capital ties between WeWork and Flexport at play here. Freight forwarding still involves large numbers of people on the ground to handle tasks that are difficult or impossible to automate, primarily around shipments exceptions (such as when trucks don’t show up as expected, or asking a carrier to do a favor for a valued customer). The Flexport model is not considered as scalable as some of the purer software-as-a-service (SaaS) companies that have successfully gone public in recent times. As one venture capitalist put it to JOC.com, “There are no network effects there.” In other words, Flexport needs to drive revenue growth in the same way that incumbent forwarders do: one customer at a time, with a set of services catered to that specific customer, even if the technology is designed to scale across its customers. In a SaaS environment, the same core piece of software can be leveraged across an entire customer base. Funding to weather adversity “Bringing global trade online will not happen overnight,” the Flexport spokesperson said in response to questions about how the SoftBank valuation struggles might impact Flexport’s future. “The industry is complex and addressing its problems requires significant investment across technology, infrastructure, and expertise. When we raised our most recent round, our intent was to have enough funds to build out all three of these areas while weathering any economic or political turbulence on our path to profitability.” Flexport has never been shy about promoting its technology-first approach to forwarding, but it is a people-intensive company similar to other third-party logistics providers (3PLs). CEO Ryan Petersen said in September his company has 1,700 employees. At the announcement of the $1 billion SoftBank round in February, Flexport said it earned $441 million in revenue in 2018, a 95 percent increase over 2017. Because Flexport is privately held, its financials are not publicly available outside of what the company provides, but assuming Flexport’s revenue growth in 2019 is similar to that of its stated 2018 growth, it would be on track to generate about $860 million in gross revenue this year. On a per employee basis, that would be a theoretical ratio of about $506,000 of revenue per employee. Compare that to publicly traded rival Panalpina, which in 2018 had revenue of about $419,000 per employee (Panalpina was acquired by DSV in a deal completed in August). In 2018, DSV earned about $245,000 per employee, while Kuehne + Nagel earned $270,000 per employee (both DSV and Kuehne + Nagel are publicly traded). The revenue per employee metric is useful as a gauge to measure Flexport against its forwarding competitors, but software providers would aim to ultimately have higher per-employee revenue generation. In one sense, SoftBank’s problems with its other investments shouldn’t apply to Flexport. Flexport is a different company in a different market and different internal characteristics. Yet it’s hard to decouple Flexport from the broader SoftBank discussion simply because nearly three-quarters of Flexport’s capital raised to date has come from the $1 billion funding round in February led by SoftBank. The health — and perception of health — of the broader Vision Fund portfolio are not irrelevant for Flexport. Venture capital is in many ways a perception game. Big name VC firms are brought in to deals to bolster the profile of the startup being backed. When a VC perceived to be on the lower end of the totem pole is leading a round, that can be perceived negatively, and influence the attractiveness of a startup in future investment rounds. When a large VC with a consistent track record misses big on an investment, it’s considered an anomaly. But when a VC, even one as well capitalized as SoftBank, misses on numerous late-stage valuations, it becomes a concern. The key, as it relates to the valuations of WeWork and Uber, is that those were supposed to be SoftBank’s success stories. VCs invested a total of $12.8 billion into WeWork, according to the venture capital database Crunchbase. The company was privately valued by SoftBank at $47 billion in January, but Bloomberg reported Oct. 18 the valuation at initial public offering could be as low as $8 billion . SoftBank didn’t respond to a JOC request for comment. Another round? All this leads to an important question regarding the near-term future of Flexport: Does it need to raise more money? “Independent of runway, it’s important for a startup to fundraise every 12 to 24 months, to ‘check in with the market,’” the venture capitalist Semil Shah, founder and general partner at Silicon Valley-based Haystack Ventures, wrote on Twitter Oct. 15 . “The act of convincing a new investor to get conviction and set a price is a healthy checkpoint for all parties — founders, early employees, and existing investors.” One could surmise that Flexport is now big enough and has secured enough funding to no longer be considered a startup, and thus may not be in need of future venture capital funding. But that notion belies the modern model of VC-backed growth, in which VC investments — from seed stage all the way to multi-billion dollar later rounds — are all larger than they were a decade ago. Startups that have successfully raised venture capital are staying private longer and thus waiting to go public longer. In that environment, Flexport may need to keep raising funds. According to tech sources who spoke to JOC.com at the time of the $1 billion funding round led by SoftBank in February, raising that much money made sense for Flexport if its goal was to overtake incumbents, because forwarding takes human resources, which takes capital. But, they also said, it might limit Flexport’s next steps. Less funding, on the other hand, might presage an initial public offering, and a lower valuation might entice another company to acquire Flexport. By taking such a large tranche of investment, they said, Flexport might be boxing itself into a single path down the road: acquisition by a private equity firm, which would be an entirely different scenario, in making the end to Flexport’s tale similar to other 3PLs and software companies in the logistics industry. Petersen, at the time, disagreed with the notion that the $1 billion investment into Flexport might reduce the number of paths it could take. “It establishes ourselves as a strong independent company. The future is wide open on what we can do. Our investors of course expect a return on their investment, but there are many ways to pay those investors back.” The bigger issue, as VC and private equity experts explained, is what happens if Flexport goes out for funding in the near future but is only able to raise a down round. And therein lies a key question about how Flexport is valued and what its path forward is. Is its growth fundamentally constrained by its 3PL model, or can it achieve what SaaS companies can? When asked if there is a concern that Flexport may be categorized in a different long-term growth segment by investors because it isn't strictly a SaaS company, the Flexport spokesperson said, “that's not a concern for us.” Flexport last week added a SaaS component to its offerings in acquiring the container visibility software provider Crux Systems , which it will continue to offer as a standalone solution. And that might provide a window into what the future of the company looks like, i.e. more of a platform and less a pure forwarder or SaaS provider. Bubble about to pop? More broadly, an equity analyst in the transportation and logistics space told JOC.com he sees signs of a “late-stage startup VC capital bubble.” “People are starting to see the light that tech is not such a defensible thing,” the source said. “Tech in and of itself is a competitive advantage. It’s big, but it doesn’t last long. It’s all coming to a head and it’s just a matter of when.” In other words, there’s a feeling in some quarters that part of the money flowing into logistics technology is not aimed at good long-term investments because the technology component of those investments can be replicated. Head starts count for something, but not everything. On the other hand, Flexport’s model in some way mitigates that vulnerability, because it has been investing its capital in industry expertise, not just technology, which — although not a pure differentiator — allows it to more effectively compete head-to-head against incumbents. Some notable hires in the past few months include: Mathijs Slangen as vice president of sales in Europe (Slangen previously worked at the freight broker Coyote Logistics and before that was with the consultant Seabury); Rosalie Cmelak as a key account manager (she worked for 15 years at Oracle, including a key role in developing its global trade management software); and Tom Gould as vice president of customs and trade advisory (Gould’s long career most recently saw him serve as a senior director of customs at the trade law firm Sandler, Travis & Rosenberg). But the equity analyst said Flexport, as well as well-capitalized domestic digital freight brokers, need to be wondering about their future path. “The question investors have to ask is ‘what is someone going to pay for it and what’s the exit?’ I’m not sure there’s a ton of appetite in the public markets. And in terms of potential buyers, who’s left?” He gave a specific example in the domestic market. “Why would they buy a digital freight matching company at 10 times revenue when they could buy [the freight broker] Echo [Global Logistics] at 10 times [earnings before interest, tax, depreciation, and amortization]?” The analyst said forwarder valuations, in general, are “under pressure” due to concerns around global economic growth, trade skirmishes, and even the shorter-term issue of the low-sulfur fuel mandate impacting the container shipping industry from Jan. 1. “Going from high growth and net negative earnings to less growth and becoming profitable is a huge challenge,” the analyst said about Flexport. “You need growth within the pie or growth of the pie.” Another path might be to use funding to acquire customers, he said, though “once you pivot to a rollup, you have to spend money on backend integration.” Contact Eric Johnson at eric.johnson@ihsmarkit.com and follow him on Twitter: @LogTechEric .

Logistics Technology News

WeWork's valuation collapse raises Flexport questions

<div class="phx-topic abstract-wrapper">The fresh capacity carriers rushed into the US’ busiest trade lane in April and May is no longer needed, sending rates on a downward spiral and forcing carriers to shelve proposed price hikes.</div>

The fresh capacity carriers rushed into the US’ busiest trade lane in April and May is no longer needed, sending rates on a downward spiral and forcing carriers to shelve proposed price hikes.

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<div class="phx-topic">Ocean carriers have failed to implement a planned general rate increase (GRI) in the eastbound trans-Pacific this week, with vessel capacity on the route exceeding forward demand that has been in steady decline for weeks. And in yet another sign that the peak shipping season will be muted, carriers have also dropped plans to impose a peak season surcharge (PSS) on fixed-rate contracts to the US West Coast. That comes as spot rates paid by importers and freight-all-kinds (FAK) rates charged to forwarders continue to sink. “They went up quickly. It looks like they’re going down just as quickly,” Kurt McElroy, executive vice president at the forwarder Kerry Apex, said. “There’s not enough demand.” Carriers have announced PSSs of $1,000 per FEU to the US East Coast from July 1–14, according to carrier rate announcements shared with the Journal of Commerce, who spoke to eight forwarders and two carriers for this story. At least one container line is rolling PSSs into quarterly rates, but at approximately half the amount, two shippers said on the condition of anonymity. Rate activity in the largest US trade lane <a href="https://www.joc.com/article/importers-try-to-push-cargo-to-contract-rates-as-trans-pac-spot-market-surges-5244311">contrasts sharply with last year</a>, when spot rates surged as high as $10,000 per FEU to the East Coast and $8,000 to the West Coast in early July, while carriers were also able to impose a series of PSSs throughout the summer and fall. This year, uncertainty about the Trump administration’s trade policy resulted in massive frontloading of fall and holiday merchandise as US retailers rushed to bring in goods during a 90-day reprieve from so-called reciprocal tariffs. The pause on tariffs from most countries expires July 9, while a similar reprieve on China-sourced goods ends Aug. 14. That frontloading likely means weaker imports during the traditional August through October peak shipping season, said Christian Sur, executive vice president for ocean freight contract logistics at the forwarder Unique Logistics International. Last year, July to October volume was strong, but with all of the frontloading, especially from China, no one expects the volume to be as strong this year,” Sur said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e8c13a3e-9f5a-412f-8741-adbf5e1a7779"></dynamic-object></div>As a result, spot rates have been sinking rapidly over the past month. Platts, a sister company of the Journal of Commerce within S&amp;P Global, pegged spot rates from North Asia to the West Coast at $2,200 per FEU as of July 1, down 15% on the week. Rates to the East Coast were $4,300 per FEU, 12% lower. Rate benchmarking platform Xeneta had the West Coast spot rate at $2,800 per FEU as of June 26, with the East Coast at $5,473 per FEU. Spot rates listed on some rate indexes can lag the rates importers and forwarders are actually paying by a week or longer. This week, most imports from Asia are moving at $4,400 to $4,500 per FEU to the East Coast and $2,400 to $2,500 per FEU to the West Coast, McElroy said. Retailers and forwarders who shop around can secure even lower prices from some carriers, said Jon Monroe, who serves as an adviser to forwarders. Some carriers are quoting sub-$4,000-per-FEU spot/FAK rates to the East Coast and sub-$2,000 per FEU to the West Coast, Monroe said. <h3>Tariffs a fading concern? </h3>Carriers ending PSSs on fixed-rate accounts for both importers and forwarders to the West Coast and limiting their PSSs to the East Coast to two weeks from July 1–14 indicate that going forward, no one is making bookings based on tariff deadlines, Sur said. “Tariffs are quickly becoming a non-issue,” he said. Ample vessel capacity for the coming months has also made shipper concerns about securing space this summer less of an issue than it was in past years. Data from maritime visibility provider eeSea shows that the recent addition of vessel capacity by trans-Pacific carriers has brought total capacity to 1.57 million TEUs in July, the highest for any month since 2021. Some 8.6% of that capacity is poised to be blanked. In August, the total capacity is scheduled to slip to 1.48 million TEUs, with 7.7% of the capacity scheduled to be blanked. Even with the blank sailings, the total capacity offered in the eastbound trans-Pacific will be almost 20% higher in July than July 2024 and 10.6% higher in August year over year, according to eeSea. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="c3135e8b-9bef-4f08-a278-5c853b855a74"></dynamic-object></div>Carriers rushed fresh capacity into the eastbound trans-Pacific in April and May when the Trump administration announced the pauses on higher tariffs. But once that surge in bookings was over, overcapacity took hold, sending rates on a downward spiral. A carrier source said the eastbound trans-Pac may witness additional blank sailings in the coming months. “Volumes are starting to go down and rates are falling because a lot of capacity was brought on,” the source said. “If management starts seeing the rates decline very quickly, they might remove the capacity.” <h3>August–October volumes difficult to forecast </h3>Projecting import volumes for the traditional August through October peak shipping season remains a hazy task, forwarders and carriers say. “This is a time when it is hard to predict where we are headed,” said Robert Khachatryan, CEO of the forwarder Freight Right Global Logistics. Still, Khachatryan said he does not detect huge demand building among importers. “The market is still soft and is likely to remain so at least through July,” a second carrier executive said. “But we can’t say beyond that. We’re in a wait-and-see mode.” A logistics manager for a large retailer told the Journal of Commerce she is still waiting on the company’s second-half forecast, but July and August look softer than last year. The source said July will be the retailer’s peak season. The retailer is still paying a $500 PSS into the West Coast, but that is down from $2,000 per FEU originally. Despite the frontloading by most retailers, there is still fall and holiday merchandise scheduled to be shipped. While import volumes will be down from last fall’s double-digit year-over-year increases, they won’t fall off the cliff. Ben Coleman, president of the forwarder Teampower Logistics, said there are clients with seasonal merchandise still scheduled to ship and others who will seek to rebuild their inventories. Another forwarder said the several months of frontloading did not rob the eastbound trans-Pacific of all its cargo this fall. “There are still retail goods that have to be moved,” the source said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>.Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>.</div>

Ocean carriers have failed to implement a planned general rate increase (GRI) in the eastbound trans-Pacific this week, with vessel capacity on the route exceeding forward demand that has been in steady decline for weeks. And in yet another sign that the peak shipping season will be muted, carriers have also dropped plans to impose a peak season surcharge (PSS) on fixed-rate contracts to the US West Coast. That comes as spot rates paid by importers and freight-all-kinds (FAK) rates charged to forwarders continue to sink. “They went up quickly. It looks like they’re going down just as quickly,” Kurt McElroy, executive vice president at the forwarder Kerry Apex, said. “There’s not enough demand.” Carriers have announced PSSs of $1,000 per FEU to the US East Coast from July 1–14, according to carrier rate announcements shared with the Journal of Commerce, who spoke to eight forwarders and two carriers for this story. At least one container line is rolling PSSs into quarterly rates, but at approximately half the amount, two shippers said on the condition of anonymity. Rate activity in the largest US trade lane contrasts sharply with last year , when spot rates surged as high as $10,000 per FEU to the East Coast and $8,000 to the West Coast in early July, while carriers were also able to impose a series of PSSs throughout the summer and fall. This year, uncertainty about the Trump administration’s trade policy resulted in massive frontloading of fall and holiday merchandise as US retailers rushed to bring in goods during a 90-day reprieve from so-called reciprocal tariffs. The pause on tariffs from most countries expires July 9, while a similar reprieve on China-sourced goods ends Aug. 14. That frontloading likely means weaker imports during the traditional August through October peak shipping season, said Christian Sur, executive vice president for ocean freight contract logistics at the forwarder Unique Logistics International. Last year, July to October volume was strong, but with all of the frontloading, especially from China, no one expects the volume to be as strong this year,” Sur said. As a result, spot rates have been sinking rapidly over the past month. Platts, a sister company of the Journal of Commerce within S&P Global, pegged spot rates from North Asia to the West Coast at $2,200 per FEU as of July 1, down 15% on the week. Rates to the East Coast were $4,300 per FEU, 12% lower. Rate benchmarking platform Xeneta had the West Coast spot rate at $2,800 per FEU as of June 26, with the East Coast at $5,473 per FEU. Spot rates listed on some rate indexes can lag the rates importers and forwarders are actually paying by a week or longer. This week, most imports from Asia are moving at $4,400 to $4,500 per FEU to the East Coast and $2,400 to $2,500 per FEU to the West Coast, McElroy said. Retailers and forwarders who shop around can secure even lower prices from some carriers, said Jon Monroe, who serves as an adviser to forwarders. Some carriers are quoting sub-$4,000-per-FEU spot/FAK rates to the East Coast and sub-$2,000 per FEU to the West Coast, Monroe said. Tariffs a fading concern? Carriers ending PSSs on fixed-rate accounts for both importers and forwarders to the West Coast and limiting their PSSs to the East Coast to two weeks from July 1–14 indicate that going forward, no one is making bookings based on tariff deadlines, Sur said. “Tariffs are quickly becoming a non-issue,” he said. Ample vessel capacity for the coming months has also made shipper concerns about securing space this summer less of an issue than it was in past years. Data from maritime visibility provider eeSea shows that the recent addition of vessel capacity by trans-Pacific carriers has brought total capacity to 1.57 million TEUs in July, the highest for any month since 2021. Some 8.6% of that capacity is poised to be blanked. In August, the total capacity is scheduled to slip to 1.48 million TEUs, with 7.7% of the capacity scheduled to be blanked. Even with the blank sailings, the total capacity offered in the eastbound trans-Pacific will be almost 20% higher in July than July 2024 and 10.6% higher in August year over year, according to eeSea. Carriers rushed fresh capacity into the eastbound trans-Pacific in April and May when the Trump administration announced the pauses on higher tariffs. But once that surge in bookings was over, overcapacity took hold, sending rates on a downward spiral. A carrier source said the eastbound trans-Pac may witness additional blank sailings in the coming months. “Volumes are starting to go down and rates are falling because a lot of capacity was brought on,” the source said. “If management starts seeing the rates decline very quickly, they might remove the capacity.” August–October volumes difficult to forecast Projecting import volumes for the traditional August through October peak shipping season remains a hazy task, forwarders and carriers say. “This is a time when it is hard to predict where we are headed,” said Robert Khachatryan, CEO of the forwarder Freight Right Global Logistics. Still, Khachatryan said he does not detect huge demand building among importers. “The market is still soft and is likely to remain so at least through July,” a second carrier executive said. “But we can’t say beyond that. We’re in a wait-and-see mode.” A logistics manager for a large retailer told the Journal of Commerce she is still waiting on the company’s second-half forecast, but July and August look softer than last year. The source said July will be the retailer’s peak season. The retailer is still paying a $500 PSS into the West Coast, but that is down from $2,000 per FEU originally. Despite the frontloading by most retailers, there is still fall and holiday merchandise scheduled to be shipped. While import volumes will be down from last fall’s double-digit year-over-year increases, they won’t fall off the cliff. Ben Coleman, president of the forwarder Teampower Logistics, said there are clients with seasonal merchandise still scheduled to ship and others who will seek to rebuild their inventories. Another forwarder said the several months of frontloading did not rob the eastbound trans-Pacific of all its cargo this fall. “There are still retail goods that have to be moved,” the source said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com .Contact Laura Robb at laura.robb@spglobal.com .

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Excess capacity sinks planned July 1 rate increase in eastbound trans-Pacific

<div class="phx-topic abstract-wrapper">The complaint from Dollar General alleges the carrier sold more of its capacity in the high-flying spot market of 2021, leaving shippers under fixed-price contracts in the lurch.</div>

The complaint from Dollar General alleges the carrier sold more of its capacity in the high-flying spot market of 2021, leaving shippers under fixed-price contracts in the lurch.

<div class="phx-topic">Yang Ming made available about one-quarter of the container ship space it agreed to provide to discount retailer Dollar General in 2021, forcing the discount retailer to book freight at higher spot rates as the ocean carrier sold capacity to forwarders, according to a complaint made to the US Federal Maritime Commission. The complaint, filed last week, marks the latest instance of shippers claiming their freight was bumped during the COVID-19 container surge. Dollar General’s complaint marks <a href="https://www.joc.com/article/two-us-shippers-latest-to-allege-carriers-bumped-contract-cargo-to-spot-market-5921997">at least the fifth</a> filed <a href="https://www.joc.com/article/yang-ming-settles-fmc-complaint-with-importer-5194345">since 2022</a> against Yang Ming over its service contract commitments. Dollar General is seeking $14.77 million in damages; Yang Ming did not respond to a request for a comment. Dollar General claims that its service contract with Yang Ming included a commitment to ship 2,226 containers during the 2021 service year. The carrier was to provide 130% of weekly, prorated capacity for those containers as long as Dollar General provided shipment forecasts about a month ahead of time. Despite Dollar General providing rolling forecasts of its anticipated shipments, it said Yang Ming failed to meet its capacity commitment during 11 of 14 weeks in 2021. Ultimately, Dollar General only secured space for 616 containers under its service contract, forcing it “to seek carriage from other sources at higher rates, or else forgo shipments entirely,” it said in the complaint. “Yang Ming knew before the beginning of the 2021 shipping year that it had overcommitted space to its service contract customers and would not be able to satisfy the signed minimum quantity commitments — yet it continued to finalize and execute contracts anyway,” Dollar General alleged. The complaint cites Yang Ming internal data that shows at the beginning of the 2021 shipping year the company allocated about 40% of its vessel capacity to beneficial cargo owners (BCOs), with the remainder sold to non-vessel-operating common carriers (NVOs), primarily in the spot market. However, “Yang Ming ultimately allocated less than 30% of its total capacity to its BCO customers while allocating approximately 70% to its NVO customers,” Dollar General alleged in the complaint. Larger BCOs were also favored over smaller BCOs, the complaint alleges. Dollar General cited an internal email at Yang Ming that it came into possession of, saying some of the carrier’s major BCOs “are receiving almost 400 TEUs above what we agreed to give them.” Despite a request from a local Yang Ming representative to reallocate that space to smaller BCOs, “every single customer ... knows what is happening. Someone is getting the space and it is the [fixed] accounts that are paying the most,” according to one Yang Ming email cited in the complaint. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Yang Ming made available about one-quarter of the container ship space it agreed to provide to discount retailer Dollar General in 2021, forcing the discount retailer to book freight at higher spot rates as the ocean carrier sold capacity to forwarders, according to a complaint made to the US Federal Maritime Commission. The complaint, filed last week, marks the latest instance of shippers claiming their freight was bumped during the COVID-19 container surge. Dollar General’s complaint marks at least the fifth filed since 2022 against Yang Ming over its service contract commitments. Dollar General is seeking $14.77 million in damages; Yang Ming did not respond to a request for a comment. Dollar General claims that its service contract with Yang Ming included a commitment to ship 2,226 containers during the 2021 service year. The carrier was to provide 130% of weekly, prorated capacity for those containers as long as Dollar General provided shipment forecasts about a month ahead of time. Despite Dollar General providing rolling forecasts of its anticipated shipments, it said Yang Ming failed to meet its capacity commitment during 11 of 14 weeks in 2021. Ultimately, Dollar General only secured space for 616 containers under its service contract, forcing it “to seek carriage from other sources at higher rates, or else forgo shipments entirely,” it said in the complaint. “Yang Ming knew before the beginning of the 2021 shipping year that it had overcommitted space to its service contract customers and would not be able to satisfy the signed minimum quantity commitments — yet it continued to finalize and execute contracts anyway,” Dollar General alleged. The complaint cites Yang Ming internal data that shows at the beginning of the 2021 shipping year the company allocated about 40% of its vessel capacity to beneficial cargo owners (BCOs), with the remainder sold to non-vessel-operating common carriers (NVOs), primarily in the spot market. However, “Yang Ming ultimately allocated less than 30% of its total capacity to its BCO customers while allocating approximately 70% to its NVO customers,” Dollar General alleged in the complaint. Larger BCOs were also favored over smaller BCOs, the complaint alleges. Dollar General cited an internal email at Yang Ming that it came into possession of, saying some of the carrier’s major BCOs “are receiving almost 400 TEUs above what we agreed to give them.” Despite a request from a local Yang Ming representative to reallocate that space to smaller BCOs, “every single customer ... knows what is happening. Someone is getting the space and it is the [fixed] accounts that are paying the most,” according to one Yang Ming email cited in the complaint. Contact Michael Angell at michael.angell@spglobal.com .

Yang Ming hit with new FMC complaint over service contracts

<div class="phx-topic abstract-wrapper">The deployment of 24,000-TEU ships on its Africa Express service allows the carrier to better leverage billions of dollars invested in West Africa in recent years, reducing exposure to congested North European ports. </div>

The deployment of 24,000-TEU ships on its Africa Express service allows the carrier to better leverage billions of dollars invested in West Africa in recent years, reducing exposure to congested North European ports.

<div class="phx-topic">Mediterranean Shipping Co.’s recent deployment of the largest vessels in its fleet to West African ports shows how the container line is capitalizing on the regional market and reducing its reliance on European hubs for transshipping. The deployment in April of 24,000-TEU ships on its Africa Express service allows MSC to better leverage billions of dollars invested in West Africa in recent years, reducing exposure to congested North European ports and tapping growing regional demand. West Africa’s GDP is forecast to expand 4.3% in 2025–26, according to the African Development Bank. The service connecting West Africa with north and southeast Asia calls Tema, Ghana and its longstanding hub in Lomé, Togo. Container volumes at Lomé last year rose 5% year over year to 2 million TEUs, according to an <a href="https://www.togofirst.com/en/logistics/2404-16204-lome-port-records-modest-growth-in-2024-fueled-by-strong-transshipment?utm_source=chatgpt.com">Invest in Togo</a> report. MSC’s European hub-and-spoke network relies on Antwerp, Gioia Tauro, Rotterdam and Valencia, yet its $6.1 billion acquisition of Bolloré Africa Logistics (renamed Africa Global Logistics [AGL]) in 2022 opened new possibilities for the carrier. At MSC’s emerging hub in Abidjan, Côte d’Ivoire, where a second terminal operated by AGL opened in 2022, volumes rocketed 29% last year to 1.6 million TEUs, the <a href="https://www.ecofinagency.com/finance/2702-46447-port-of-abidjan-handles-1-6-million-teus-in-2024-almost-double-2022?utm_source=chatgpt.com">Ecofin Agency</a> said. The new facility expanded Abidjan’s container capacity to 2.5 million TEUs. MSC was not available for comment. <h3>Creating new hubs ‘makes sense’ </h3>The growth in West Africa’s transshipment volumes is more than just a result of major carriers routing ships around the Cape of Good Hope to avoid Houthi rebel attacks in the Red Sea, analysts tell the Journal of Commerce. Transshipping through Lomé and Abidjan allows MSC to reduce exposure when port congestion hits Antwerp and Rotterdam, as has been the case since the start of 2025. Setting up hubs closer to Europe — but not in Europe — could allow carriers to reduce payments under the EU Emissions Trading Scheme, which launched in 2024, said Jan Hoffmann, the World Bank’s global lead for maritime transport and ports. “The region used to be connected to the rest of the world via transshipment services in Antwerp or Rotterdam [but] now counts on numerous direct connections, with the largest vessels,” said Hoffmann. “Deploying ultra large container ships [ULCSs] on that route and establishing hubs in [the West Africa] region makes sense for a number of reasons.” In addition to reducing payments under the EU Emissions Trading Scheme, those reasons include improvements to roads connecting West African ports. As the largest operator of container ship tonnage and free of a shipping alliance partner, MSC is well positioned to make bolder moves within its network, said Jeremy Masters, managing director of Shipping Masters and a Journal of Commerce contributor. Other container lines serve West Africa but have yet to significantly drive transshipment volumes, Masters said. For example, CMA CGM deploys 16,000-TEU ships on its West Africa loop connecting Pointe-Noire in the Republic of Congo to Qingdao, China. Ocean Network Express’ services to the region are more focused on loops serving West Africa than feeding a node connecting deep-sea services to short-sea services. West Africa ports are growing and modernizing. DP World is spending $1.2 billion to construct a greenfield facility at Ndayane in Senegal. When phase one is completed in 2027, <a href="https://www.dpworld.com/news/releases/dp-world-kicks-off-maritime-construction-at-new-12-billion-port-in-senegal/">the port’s 1.2 million TEU container capacity</a> will reduce pressure on the country’s other major port, Dakar. The ULCSs will likely be repatriated to the Suez Canal routing when maritime safety is restored to the Red Sea, Masters said. “But if Lomé has by that time proven [itself] through its local and regional feed of volume, and then if MSC looks at other deep-sea routes that connect through, then I think [the port] would have established itself in its own right,” he said. Still, such is the combined impact of the size of the global container ship order book and the amount of vessels likely to be freed up by the would-be shorter Suez routings that it can be argued that West Africa’s increasing attractiveness could be just the way to put all the extra tonnage to good use. Contact Peter Shaw-Smith at <a href="mailto:petershawsmith@gmail.com">petershawsmith@gmail.com</a>. </div>

Mediterranean Shipping Co.’s recent deployment of the largest vessels in its fleet to West African ports shows how the container line is capitalizing on the regional market and reducing its reliance on European hubs for transshipping. The deployment in April of 24,000-TEU ships on its Africa Express service allows MSC to better leverage billions of dollars invested in West Africa in recent years, reducing exposure to congested North European ports and tapping growing regional demand. West Africa’s GDP is forecast to expand 4.3% in 2025–26, according to the African Development Bank. The service connecting West Africa with north and southeast Asia calls Tema, Ghana and its longstanding hub in Lomé, Togo. Container volumes at Lomé last year rose 5% year over year to 2 million TEUs, according to an Invest in Togo report. MSC’s European hub-and-spoke network relies on Antwerp, Gioia Tauro, Rotterdam and Valencia, yet its $6.1 billion acquisition of Bolloré Africa Logistics (renamed Africa Global Logistics [AGL]) in 2022 opened new possibilities for the carrier. At MSC’s emerging hub in Abidjan, Côte d’Ivoire, where a second terminal operated by AGL opened in 2022, volumes rocketed 29% last year to 1.6 million TEUs, the Ecofin Agency said. The new facility expanded Abidjan’s container capacity to 2.5 million TEUs. MSC was not available for comment. Creating new hubs ‘makes sense’ The growth in West Africa’s transshipment volumes is more than just a result of major carriers routing ships around the Cape of Good Hope to avoid Houthi rebel attacks in the Red Sea, analysts tell the Journal of Commerce. Transshipping through Lomé and Abidjan allows MSC to reduce exposure when port congestion hits Antwerp and Rotterdam, as has been the case since the start of 2025. Setting up hubs closer to Europe — but not in Europe — could allow carriers to reduce payments under the EU Emissions Trading Scheme, which launched in 2024, said Jan Hoffmann, the World Bank’s global lead for maritime transport and ports. “The region used to be connected to the rest of the world via transshipment services in Antwerp or Rotterdam [but] now counts on numerous direct connections, with the largest vessels,” said Hoffmann. “Deploying ultra large container ships [ULCSs] on that route and establishing hubs in [the West Africa] region makes sense for a number of reasons.” In addition to reducing payments under the EU Emissions Trading Scheme, those reasons include improvements to roads connecting West African ports. As the largest operator of container ship tonnage and free of a shipping alliance partner, MSC is well positioned to make bolder moves within its network, said Jeremy Masters, managing director of Shipping Masters and a Journal of Commerce contributor. Other container lines serve West Africa but have yet to significantly drive transshipment volumes, Masters said. For example, CMA CGM deploys 16,000-TEU ships on its West Africa loop connecting Pointe-Noire in the Republic of Congo to Qingdao, China. Ocean Network Express’ services to the region are more focused on loops serving West Africa than feeding a node connecting deep-sea services to short-sea services. West Africa ports are growing and modernizing. DP World is spending $1.2 billion to construct a greenfield facility at Ndayane in Senegal. When phase one is completed in 2027, the port’s 1.2 million TEU container capacity will reduce pressure on the country’s other major port, Dakar. The ULCSs will likely be repatriated to the Suez Canal routing when maritime safety is restored to the Red Sea, Masters said. “But if Lomé has by that time proven [itself] through its local and regional feed of volume, and then if MSC looks at other deep-sea routes that connect through, then I think [the port] would have established itself in its own right,” he said. Still, such is the combined impact of the size of the global container ship order book and the amount of vessels likely to be freed up by the would-be shorter Suez routings that it can be argued that West Africa’s increasing attractiveness could be just the way to put all the extra tonnage to good use. Contact Peter Shaw-Smith at petershawsmith@gmail.com .

Port infrastructure

Marine terminals

International ports

Growth in West African ports opens new transshipment options for MSC

<div class="phx-topic abstract-wrapper">The $177 million plan to enlarge Spain’s TTI Algeciras is in line with the strategy of ocean carriers to diversify revenue and exert greater control over their supply chains. </div>

The $177 million plan to enlarge Spain’s TTI Algeciras is in line with the strategy of ocean carriers to diversify revenue and exert greater control over their supply chains.

<div class="phx-topic">TTI Algeciras, one of the two main terminals in the west Mediterranean transshipment hub, has submitted expansion plans to the port authority that would increase handling capacity by 500,000 TEUs. The €150 million ($177 million) investment by owners HMM and CMA CGM would take capacity at Spain’s second-largest terminal to 2.1 million TEUs by 2028, with future plans to increase capacity to 2.8 million. In support of the investment, the Algeciras Port Authority has extended the terminal operating concession by 22 years to 2065. “This expansion is the natural evolution of more than a decade of steady growth,” Alonso Luque, CEO of TTI Algeciras, said in a statement Wednesday. “The project not only adds much-needed physical capacity but also positions us to take on new service opportunities and larger vessels.” HMM acquired 100% of TTI Algeciras in 2017 and sold a 49.9% stake to CMA CGM in 2020. The plan to expand TTI Algeciras is in line with the strategy of both carriers — more so CMA CGM — that are expanding investment in container terminals to diversify revenue and exert greater control over their supply chains. The Port of Algeciras is one of the two largest transshipment hubs in the Mediterranean and is situated in southern Spain just across the Strait of Gibraltar from its transshipment rival, the Moroccan port of Tanger Med. <h3>Common-user terminal </h3>Gerardo Landaluce, chairman of the Port Authority of the Bay of Algeciras, said TTI Algeciras has played a key role in boosting the international standing of the port. “Its common-user model, open to multiple shipping lines and alliances, has helped position Algeciras as a global logistics platform and as a strategic tool for developing import and export flows throughout Andalusia and Spain,” Landaluce said in the statement. Since Houthi militants began attacks on commercial shipping in the Red Sea in December 2023, carriers have been forced to divert around southern Africa. With two weeks added to the transit from Asia, carriers wanting faster turnaround times offloaded their megaships in Algeciras and Tanger Med for onward transshipment to destination ports inside the Mediterranean. First-quarter volume at Algeciras tumbled 11% year over year because of congestion, operational challenges, declining transshipment volume and Maersk shifting an India-US service to Tanger Med. The port handled 4.7 million TEUs in 2024, down 0.6% from 2023. APM Terminals Algeciras is the other primary terminal at Algeciras and Spain’s largest. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

TTI Algeciras, one of the two main terminals in the west Mediterranean transshipment hub, has submitted expansion plans to the port authority that would increase handling capacity by 500,000 TEUs. The €150 million ($177 million) investment by owners HMM and CMA CGM would take capacity at Spain’s second-largest terminal to 2.1 million TEUs by 2028, with future plans to increase capacity to 2.8 million. In support of the investment, the Algeciras Port Authority has extended the terminal operating concession by 22 years to 2065. “This expansion is the natural evolution of more than a decade of steady growth,” Alonso Luque, CEO of TTI Algeciras, said in a statement Wednesday. “The project not only adds much-needed physical capacity but also positions us to take on new service opportunities and larger vessels.” HMM acquired 100% of TTI Algeciras in 2017 and sold a 49.9% stake to CMA CGM in 2020. The plan to expand TTI Algeciras is in line with the strategy of both carriers — more so CMA CGM — that are expanding investment in container terminals to diversify revenue and exert greater control over their supply chains. The Port of Algeciras is one of the two largest transshipment hubs in the Mediterranean and is situated in southern Spain just across the Strait of Gibraltar from its transshipment rival, the Moroccan port of Tanger Med. Common-user terminal Gerardo Landaluce, chairman of the Port Authority of the Bay of Algeciras, said TTI Algeciras has played a key role in boosting the international standing of the port. “Its common-user model, open to multiple shipping lines and alliances, has helped position Algeciras as a global logistics platform and as a strategic tool for developing import and export flows throughout Andalusia and Spain,” Landaluce said in the statement. Since Houthi militants began attacks on commercial shipping in the Red Sea in December 2023, carriers have been forced to divert around southern Africa. With two weeks added to the transit from Asia, carriers wanting faster turnaround times offloaded their megaships in Algeciras and Tanger Med for onward transshipment to destination ports inside the Mediterranean. First-quarter volume at Algeciras tumbled 11% year over year because of congestion, operational challenges, declining transshipment volume and Maersk shifting an India-US service to Tanger Med. The port handled 4.7 million TEUs in 2024, down 0.6% from 2023. APM Terminals Algeciras is the other primary terminal at Algeciras and Spain’s largest. Contact Greg Knowler at greg.knowler@spglobal.com .

HMM, CMA CGM to expand key Mediterranean transshipment hub

<div class="phx-topic abstract-wrapper">The uptick in rates comes despite a 9% surge in deployed capacity on regional services since February, according to figures from British transport consultant MDS Transmodal. </div>

The uptick in rates comes despite a 9% surge in deployed capacity on regional services since February, according to figures from British transport consultant MDS Transmodal.

<div class="phx-topic">Strong cargo demand from China to Southeast Asia and longer-haul intra-Asia markets propelled intra-Asia freight rates higher in June despite a surge of new shipping capacity entering the market, logistics and shipping executives say, with some expecting the buoyant conditions to continue in the second half of the year. “Depending on the carrier, rates are around $650 to $700 per TEU from Shanghai to Ho Chi Minh City and $800 to $900 per TEU from Shanghai to Bangkok,” a senior executive at a Hong Kong-based forwarder told the Journal of Commerce. The rates for China to Southeast Asia are generally the highest since Christmas and the pre-Lunar New Year period when they were $1,000 to $1,100 per TEU to Bangkok, according to the source. “They’ve been trending higher since the end of May/early June on increased demand possibly due to the US tariff [pause] window or higher regional growth,” the executive said. “We don’t really see any slowdown in demand.” Cliff Xu, Greater China CEO for Rhenus Air &amp; Ocean, said there is a “strong market” for China cargo outbound to Southeast Asia. “This could partially be due to stable growth in the Southeast Asian economies especially with Chinese companies’ growing investment or business expansion in the region,” he said. “Orders received from businesses within the intra-Southeast Asia market are also showing very positive growth.” Xu said the strong cargo demand seen in the first half would continue for the rest of the year. <h3>Boost in deployed capacity </h3>Peter Sand, chief analyst at online benchmarking platform Xeneta, said cargo demand in the intra-Asia region grew 6.6% in the first four months of this year. Exports from China to other Far East countries climbed 15% year over year between January and April, he added, quoting the latest Chinese government figures available. FIBS Logistics was more cautious, indicating China’s long Oct. 1 National Day holidays, which start at the end of September, could impact the trade environment. “The market development/picture for this year’s Chinese National Holiday is unclear,” a FIBS spokesperson said. “We might need to review the outlook again at the end of August, although the impact of the peak season on the intra-Asia trade is later than for long-haul because intra-Asia transit times are relatively short.” Rates on longer-haul intra-Asia routes to India have also climbed to their highest level in about six months, with rates from China to Nhava Sheva near $2,600/FEU, the highest since mid-January, according to Xeneta data. Rates from China to Dubai are up 35% since January to $3,000/FEU, although Sand attributed the increase to the military conflict in the Middle East, where operational costs, including higher fuel prices and security measures, have risen on concerns of increased risks to shipping. The uptick in rates comes despite a 9% surge in deployed capacity on regional services since February, according to figures specially prepared for the Journal of Commerce by British transport consultant MDS Transmodal. Data shows capacity increased from almost 4.3 million TEUs per month in February to nearly 4.7 million TEUs in June. The figures are likely higher because they don’t include capacity increases on mainline services to Europe or the Mediterranean, which include calls at ports in Asia. Carriers that saw the biggest increase in capacity deployment include Mediterranean Shipping Co., which deployed an extra 10% of capacity, or nearly 52,000 TEUs, to the intra-Asia trade between the first and second quarters. CMA CGM, Taiwan’s Wan Hai Lines and South Korea’s Sinokor Merchant Marine also boosted capacity, according to MDS figures. <h3>Equipment challenges in key ports </h3>That comes as shippers are facing equipment challenges in key export ports. FIBS Logistics said Monday all mainline carriers including Hapag-Lloyd, Evergreen Marine, CMA CGM and Cosco Shipping Lines are facing tight supply or shortages of equipment in Ho Chi Minh City and Haiphong, while CMA CGM is facing a tight supply of containers at Shanghai, Ningbo and Shenzhen and Taiwanese ports including Kaohsiung. Other carriers such as Hapag-Lloyd, Evergreen and HMM are experiencing equipment issues at other ports including Shanghai and Ningbo, according to FIBS. “Overall, space for intra-Asia remains tight and overbooked,” the FIBS Logistics spokesperson told the Journal of Commerce. Rhenus’ Xu said although the availability of equipment has generally improved year over year as carriers took delivery of new boxes, “ships exiting China may face tight supply of equipment in the short term before the long holidays in September.” Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Strong cargo demand from China to Southeast Asia and longer-haul intra-Asia markets propelled intra-Asia freight rates higher in June despite a surge of new shipping capacity entering the market, logistics and shipping executives say, with some expecting the buoyant conditions to continue in the second half of the year. “Depending on the carrier, rates are around $650 to $700 per TEU from Shanghai to Ho Chi Minh City and $800 to $900 per TEU from Shanghai to Bangkok,” a senior executive at a Hong Kong-based forwarder told the Journal of Commerce. The rates for China to Southeast Asia are generally the highest since Christmas and the pre-Lunar New Year period when they were $1,000 to $1,100 per TEU to Bangkok, according to the source. “They’ve been trending higher since the end of May/early June on increased demand possibly due to the US tariff [pause] window or higher regional growth,” the executive said. “We don’t really see any slowdown in demand.” Cliff Xu, Greater China CEO for Rhenus Air & Ocean, said there is a “strong market” for China cargo outbound to Southeast Asia. “This could partially be due to stable growth in the Southeast Asian economies especially with Chinese companies’ growing investment or business expansion in the region,” he said. “Orders received from businesses within the intra-Southeast Asia market are also showing very positive growth.” Xu said the strong cargo demand seen in the first half would continue for the rest of the year. Boost in deployed capacity Peter Sand, chief analyst at online benchmarking platform Xeneta, said cargo demand in the intra-Asia region grew 6.6% in the first four months of this year. Exports from China to other Far East countries climbed 15% year over year between January and April, he added, quoting the latest Chinese government figures available. FIBS Logistics was more cautious, indicating China’s long Oct. 1 National Day holidays, which start at the end of September, could impact the trade environment. “The market development/picture for this year’s Chinese National Holiday is unclear,” a FIBS spokesperson said. “We might need to review the outlook again at the end of August, although the impact of the peak season on the intra-Asia trade is later than for long-haul because intra-Asia transit times are relatively short.” Rates on longer-haul intra-Asia routes to India have also climbed to their highest level in about six months, with rates from China to Nhava Sheva near $2,600/FEU, the highest since mid-January, according to Xeneta data. Rates from China to Dubai are up 35% since January to $3,000/FEU, although Sand attributed the increase to the military conflict in the Middle East, where operational costs, including higher fuel prices and security measures, have risen on concerns of increased risks to shipping. The uptick in rates comes despite a 9% surge in deployed capacity on regional services since February, according to figures specially prepared for the Journal of Commerce by British transport consultant MDS Transmodal. Data shows capacity increased from almost 4.3 million TEUs per month in February to nearly 4.7 million TEUs in June. The figures are likely higher because they don’t include capacity increases on mainline services to Europe or the Mediterranean, which include calls at ports in Asia. Carriers that saw the biggest increase in capacity deployment include Mediterranean Shipping Co., which deployed an extra 10% of capacity, or nearly 52,000 TEUs, to the intra-Asia trade between the first and second quarters. CMA CGM, Taiwan’s Wan Hai Lines and South Korea’s Sinokor Merchant Marine also boosted capacity, according to MDS figures. Equipment challenges in key ports That comes as shippers are facing equipment challenges in key export ports. FIBS Logistics said Monday all mainline carriers including Hapag-Lloyd, Evergreen Marine, CMA CGM and Cosco Shipping Lines are facing tight supply or shortages of equipment in Ho Chi Minh City and Haiphong, while CMA CGM is facing a tight supply of containers at Shanghai, Ningbo and Shenzhen and Taiwanese ports including Kaohsiung. Other carriers such as Hapag-Lloyd, Evergreen and HMM are experiencing equipment issues at other ports including Shanghai and Ningbo, according to FIBS. “Overall, space for intra-Asia remains tight and overbooked,” the FIBS Logistics spokesperson told the Journal of Commerce. Rhenus’ Xu said although the availability of equipment has generally improved year over year as carriers took delivery of new boxes, “ships exiting China may face tight supply of equipment in the short term before the long holidays in September.” Contact Keith Wallis at keithwallis@hotmail.com .

Strong China demand buoys intra-Asia rates despite capacity surge

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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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Filling the Supply Chain Education Gap with LTL Education Courses

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

Journal of Commerce Magazine - Rectangle Box

Journal of Commerce Magazine

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

Breakbulk Report - Rectangle Box

Breakbulk Quarterly

Customers scoring their intermodal partners to identify the best service providers

Intermodal Service Scorecard - Rectangle Box

Intermodal Service Scorecard

A must-attend conference for shippers & logistics providers moving goods inland

Inland Conference - Rectangle Box

Attend Inland25

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

ISI Report - Rectangle Box

Intermodal Savings Index

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

Gateway - Rectangle Box

Gateway

A premium access outlook critical to shippers and transportation providers

QI Report - Rectangle Box

Quarterly Intelligence

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

Transport, Trade and Regulation News

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

Excess capacity sinks planned July 1 rate increase in eastbound trans-Pacific

Yang Ming hit with new FMC complaint over service contracts

Growth in West African ports opens new transshipment options for MSC