<div class="phx-topic abstract-wrapper">The $1.35 billion acquisition of multi-regional LTL carrier AAA Cooper broadens the largest US truckload operator’s service portfolio as more e-commerce freight flows toward the LTL marketplace. 
 
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The $1.35 billion acquisition of multi-regional LTL carrier AAA Cooper broadens the largest US truckload operator’s service portfolio as more e-commerce freight flows toward the LTL marketplace.

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<div>Enormous pressure on trucking capacity and the logistics changes brought about by e-commerce are evident in the $1.35 billion acquisition Tuesday of less-than-truckload (LTL) carrier AAA Cooper Transportation by Knight-Swift Transportation Holdings, the largest US truckload provider. AAA Cooper, based in Dothan, Alabama, expects to have $780 million in revenue this year, and an operating profit of $80 million. The multiregional LTL carrier serves a territory stretching from Texas to Virginia and reaching up into the Midwest, with 70 terminals, 3,000 tractors, and 7,000 trailers. Knight-Swift is the parent company of Swift Transportation, Knight Transportation, and other truckload and intermodal...

Enormous pressure on trucking capacity and the logistics changes brought about by e-commerce are evident in the $1.35 billion acquisition Tuesday of less-than-truckload (LTL) carrier AAA Cooper Transportation by Knight-Swift Transportation Holdings, the largest US truckload provider. AAA Cooper, based in Dothan, Alabama, expects to have $780 million in revenue this year, and an operating profit of $80 million. The multiregional LTL carrier serves a territory stretching from Texas to Virginia and reaching up into the Midwest, with 70 terminals, 3,000 tractors, and 7,000 trailers. Knight-Swift is the parent company of Swift Transportation, Knight Transportation, and other truckload and intermodal subsidiaries, and had $4.7 billion in revenue last year. The company operates about 18,500 tractors and 54,600 trailers. With the addition of AAA Cooper, LTL will become the Arizona-based company’s second-largest source of revenue after truckload transportation. The deal reflects the increasing role of e-commerce and retail freight in the LTL sector and the desire of US trucking companies, both truckload and LTL, to secure the business of e-commerce customers. The acquisition underscores increased commonality between two very different segments of trucking. And Knight-Swift made it clear this is only the starting point for its LTL ambitions. “This transaction firmly positions us as a meaningful player in the LTL space, where we intend to grow both organically and through future acquisitions,” CEO Dave Jackson said in a statement. That is a challenge that will shake up an LTL market that is strapped for capacity to the point where carriers have been turning away new customers. The LTL industry has been described as “at a turning point ” thanks to rising freight volumes alongside demand for shorter, more rapid deliveries. “For shippers, this means they will have a full portfolio of truckload and LTL services available from one company to manage the distribution of their shipments by size,” Satish Jindel, president of transportation research and advisory firm SJ Consulting Group, said in an interview Tuesday. “If you’re a big shipper with a full truckload going to Amazon, they can take care of it,” Jindel said. “If you’re a smaller retailer with a 2,000-pound shipment for Amazon, they can handle that, too.” For Knight-Swift, he said, “this acquisition delivers the middle-mile” segment of retail shipping. “Middle-mile” refers to moves between warehouses and distribution and fulfillment centers and stores — after the first-mile move from point of origin and before the last-mile delivery. That middle-mile segment has been shifting from truckload to LTL as shipments become smaller and more frequent. Amazon is a major reason for the shift. There are more than 1.5 million active sellers on Amazon.com in 2021, according to e-commerce intelligence firm Marketplace Pulse, and the majority use Fulfillment by Amazon (FBA) to ship products. Most of those shipments are in LTL quantities, Jindel said. “Retail is becoming a bigger part of LTL,” which has historically drawn most of its freight from industrial sources, said Jindel, who provided advisory services to Knight-Swift during the acquisition. The rapid acceleration of e-commerce during the COVID-19 pandemic is transforming the industry, however. That makes an acquisition such as this one — with the largest price for an LTL carrier since then Yellow Roadway acquired USF Freightways in 2005 for $1.37 billion — more understandable. In addition, LTL carriers, with a few exceptions, are increasingly profitable, which was not the case a decade ago. “LTL companies are getting rid of the older system of billing and they’re charging for the correct rate and dimension of each shipment,” Jindel said. “That’s what’s helping their margins and that will continue.” Overall, the operating margins of publicly traded LTL carriers are higher than truckload margins, he said. Digital future, dedicated vision In a presentation to investment analysts Tuesday, Knight-Swift positioned itself as an enabler of LTL growth at AAA Cooper, the 17th-largest US LTL trucking company , according to SJ Consulting. “We have long had an interest in the LTL space,” Jackson said in the company’s statement. "In seeking our first LTL partner, we had three main requirements,” Jackson said. The first was significant market share and scale. The second was the profitability and management depth to provide a platform for “compelling growth opportunities.” The third was a “world class” corporate culture. AAA Cooper was founded in 1955 when John H. “Red” Dove acquired a trucking firm and renamed it AAA Motor Lines. His grandson Reid Dove is CEO of the company and has been named to Knight-Swift's board of directors. Dove and his management team will continue to run the carrier. “Both of these companies have a view of the future that is digital, and AAA Cooper has been on that trail longer than most,” said Tommy Barnes, a long-time transportation executive and current chief revenue officer of MyCarrier, a multimodal platform aimed at shippers. AAA Cooper is a MyCarrier customer. Barnes noted AAA Cooper has a large dedicated trucking operation that dovetails with Knight-Swift's dedicated operations. In terms of profitability, “AAA Cooper has underperformed its peers Averitt and Southeastern, but Knight can help bolster their core LTL products,” he said. In its statement Tuesday, Knight-Swift placed AAA Cooper’s operating ratio, a measure of profitability, “in the high 80s to low 90s.” The fact that Knight-Swift will run AAA Cooper as an autonomous subsidiary, like Swift, Knight, or smaller truckload carrier Abilene Motor Express, is key, Barnes said. “This isn’t as much about operational synergies as it is about opportunities” to grow business, he said. Previous, smaller attempts at LTL-truckload combinations failed when one company used the other's assets to bolster its business rather than growing both, he said. “Knight-Swift is shrewd,” said Barnes. “They know what they’re getting into. I think they have a national plan but they want to see what they can roll up.” In the LTL sector, “there are only so many frogs in the pond.” Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @willbcassidy .

Trucking News

E-commerce draws Knight-Swift to LTL sector with $1.35 billion deal

<div class="phx-topic abstract-wrapper">The carrier announced in March it would spend $20 billion over the next four years to significantly bolster its logistics presence in the US, including expanding its US-flag fleet and increasing capacity at key US ports.</div>

The carrier announced in March it would spend $20 billion over the next four years to significantly bolster its logistics presence in the US, including expanding its US-flag fleet and increasing capacity at key US ports.

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<div class="phx-topic">CMA CGM said Thursday it has reflagged its 9,300-TEU container ship Phoenix under the US flag, the first of four ships that will be so flagged this year as the carrier looks to triple the size of its US fleet to 30 over the next four years. The reflagging of the Phoenix — the largest container vessel to ever sail under the US flag, occurred in Charleston, CMA CGM said in a statement. The ship will be used on the carrier's Indamex service that connects the US East Coast with India, Pakistan and Sri Lanka. The Marseille-based liner is owner of the US flag carrier American President Lines (APL). In March following a White House meeting with President Donald Trump, Rodolph Saade, head of CMA CGM Group, <a href="https://www.joc.com/article/cma-cgm-to-invest-20-billion-in-us-shipping-ports-and-logistics-5957748">announced the company would spend $20 billion</a> over the next four years to significantly bolster its logistics presence in the US, including expanding its US-flag fleet and increasing capacity at key US ports. ”By expanding our US-flagged fleet, we will create new jobs, support American exports, and help strengthen the nation’s maritime capabilities for years to come,” Adeline Franger Chouraqui, CEO of CMA CGM America, said in the statement. Each of the four vessels to be reflagged this year will have a capacity of 9,300 TEU. The delivery of the four ships will allow CMA CGM to increase the number of American seafarers it employs by 50%, the carrier said. Contact Kevin Saville at <a href="mailto:kevin.saville2@spglobal.com">kevin.saville2@spglobal.com</a>. </div>

CMA CGM said Thursday it has reflagged its 9,300-TEU container ship Phoenix under the US flag, the first of four ships that will be so flagged this year as the carrier looks to triple the size of its US fleet to 30 over the next four years. The reflagging of the Phoenix — the largest container vessel to ever sail under the US flag, occurred in Charleston, CMA CGM said in a statement. The ship will be used on the carrier's Indamex service that connects the US East Coast with India, Pakistan and Sri Lanka. The Marseille-based liner is owner of the US flag carrier American President Lines (APL). In March following a White House meeting with President Donald Trump, Rodolph Saade, head of CMA CGM Group, announced the company would spend $20 billion over the next four years to significantly bolster its logistics presence in the US, including expanding its US-flag fleet and increasing capacity at key US ports. ”By expanding our US-flagged fleet, we will create new jobs, support American exports, and help strengthen the nation’s maritime capabilities for years to come,” Adeline Franger Chouraqui, CEO of CMA CGM America, said in the statement. Each of the four vessels to be reflagged this year will have a capacity of 9,300 TEU. The delivery of the four ships will allow CMA CGM to increase the number of American seafarers it employs by 50%, the carrier said. Contact Kevin Saville at kevin.saville2@spglobal.com .

Maritime

Container Shipping News

Container lines

CMA CGM reflags vessel in first move to boost size of US fleet

<div class="phx-topic abstract-wrapper">Volumes from Oceania to the US East Coast have grown steadily during the past five years, with this June recording the most imports ever for a single month.</div>

Volumes from Oceania to the US East Coast have grown steadily during the past five years, with this June recording the most imports ever for a single month.

<div class="phx-topic">Mediterranean Shipping Co. will launch a new direct weekly service between the US East Coast and Oceania in February, boosting total monthly sailings on the small but expanding trade lane by approximately one-quarter. The standalone service, announced Wednesday, will be called the Eagle Service and serve several ports in Australia and New Zealand, with additional stops through the Panama Canal. It will include 11 vessels, but MSC declined to comment on how much capacity the service will bring to the trade. The full rotation includes Philadelphia, Savannah, Freeport, Rodman, Papeete, Auckland, Sydney, Melbourne, Brisbane, Tauranga, Rodman and Cristobal, before returning to Philadelphia. Volumes from Oceania to the US East Coast have grown steadily during the past five years. Between 2020 and 2024, data from PIERS shows the compound annual growth rate for USEC volumes from Oceania was 5.2%, rising to 108,198 TEUs in 2025 from 84,120 TEUs in 2020. PIERS is a sister product of the Journal of Commerce within S&amp;P Global. US imports to the East Coast from Oceania reached an all-time high for a single month in June, with 10,384 TEUs, up 6.3% year over year. April 2025 is the only other month when US imports from Oceania have exceeded 10,000 TEUs, PIERS data shows. Through the first half of 2025, Maersk has had the largest presence among carriers on the USEC-Oceania trade lane, with CMA CGM and MSC coming in second and third place, respectively. Maersk’s first-half imports from Oceania to the US East Coast alone exceeded the total TEUs carried on the trade by CMA CGM and MSC individually. Maritime intelligence provider eeSea shows four services consistently present on the trade lane since 2022, averaging about 13 to 14 sailings per month for the first seven months of 2025. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>.  </div>

Mediterranean Shipping Co. will launch a new direct weekly service between the US East Coast and Oceania in February, boosting total monthly sailings on the small but expanding trade lane by approximately one-quarter. The standalone service, announced Wednesday, will be called the Eagle Service and serve several ports in Australia and New Zealand, with additional stops through the Panama Canal. It will include 11 vessels, but MSC declined to comment on how much capacity the service will bring to the trade. The full rotation includes Philadelphia, Savannah, Freeport, Rodman, Papeete, Auckland, Sydney, Melbourne, Brisbane, Tauranga, Rodman and Cristobal, before returning to Philadelphia. Volumes from Oceania to the US East Coast have grown steadily during the past five years. Between 2020 and 2024, data from PIERS shows the compound annual growth rate for USEC volumes from Oceania was 5.2%, rising to 108,198 TEUs in 2025 from 84,120 TEUs in 2020. PIERS is a sister product of the Journal of Commerce within S&P Global. US imports to the East Coast from Oceania reached an all-time high for a single month in June, with 10,384 TEUs, up 6.3% year over year. April 2025 is the only other month when US imports from Oceania have exceeded 10,000 TEUs, PIERS data shows. Through the first half of 2025, Maersk has had the largest presence among carriers on the USEC-Oceania trade lane, with CMA CGM and MSC coming in second and third place, respectively. Maersk’s first-half imports from Oceania to the US East Coast alone exceeded the total TEUs carried on the trade by CMA CGM and MSC individually. Maritime intelligence provider eeSea shows four services consistently present on the trade lane since 2022, averaging about 13 to 14 sailings per month for the first seven months of 2025. Contact Laura Robb at laura.robb@spglobal.com . 

Trans-Pacific

MSC to launch new USEC-Oceania weekly service in February

<div class="phx-topic abstract-wrapper">Any tie-up between the two railroads would be classified as a “major transaction” under US Surface Transportation Board regulations and subject to a rigorous review that could take two to three years. </div>

Any tie-up between the two railroads would be classified as a “major transaction” under US Surface Transportation Board regulations and subject to a rigorous review that could take two to three years.

<div class="phx-topic">Union Pacific Railroad (UP) and Norfolk Southern (NS) confirmed Thursday they are in “advanced discussions” on a possible merger to create a transcontinental railroad, although UP officials declined to offer further details during a second-quarter earnings call. UP CEO Jim Vena cautioned that there are no assurances a deal will be reached. Any tie-up <a href="https://www.joc.com/article/potential-up-ns-tie-up-would-cause-major-shift-in-us-intermodal-market-6046025">between the two railroads</a> would be classified as a “major transaction” under US Surface Transportation Board regulations and subject to a rigorous review that could take two to three years. “We didn’t wake up one morning and say we’re going to do something like we just announced that we’re in discussion,” Vena told analysts. “We’ve done a lot of homework to get us to this place.” Vena declined to say how close the companies are to a deal or whether they have contacted federal regulators or the White House. “If you fundamentally have a railroad that’s operating the way we operate, then you can do things that help the nation, help our customers win, and that’s what it’s all about,” he said. “Everything else in the world is moving ahead ... If you stand still, you get left behind.” If a deal between UP and NS is announced and approved, it could benefit shippers of industrial and bulk goods, according to industry analysts with experience at Class I railroads. One analyst, who did not want to be identified, said the biggest gains would go to so-called “watershed” customers, meaning shippers that are located close to the operational networks of two railroads. Many of those shippers currently use trucks to avoid the delays and complications of handing freight between rail carriers. <h3>Differing views on intermodal impact </h3>A transaction between the two Class I railroads <a href="https://www.joc.com/article/potential-up-ns-tie-up-would-cause-major-shift-in-us-intermodal-market-6046025">would benefit Hub Group, Swift Intermodal, and parcel giant UPS</a>, which partner with both Union Pacific and Norfolk Southern. But analysts differ on whether a transcontinental railroad would ease congestion in cities such as Chicago, Memphis and Kansas City, where trains are broken up and containers exchanged between carriers. UP and rival BNSF Railway build West Coast trains bound for Chicago with freight destined for both the Chicagoland area and the East Coast. Ramp workers must break up the trains, sort and organize the containers, then mount the boxes into a stack or route them to NS or CSX for onward delivery. It’s not unlike how dockworkers separate containers for local delivery from those headed inland, then further divide loads between railroads and move them to on-dock yards. Ted Prince, CEO of Tri-Cities Intermodal, said he doesn’t believe much would change in gateway cities under a UP-NS merger. “The situation today in Chicago is not going to be any different after [a] merger,” Prince said. “A container traveling from Los Angeles to Philadelphia is still going to be sliced and diced in Chicago.” Prince also downplayed any impact on international intermodal freight, noting that ocean carriers tend to avoid expensive land-bridge routes in favor of all-water service to East Coast ports, followed by shorter drays. <h3>‘Untapped opportunities’ for intermodal </h3>But Paul Tonsager, a former Canadian National Railway executive, believes a potential merger could have an impact on the intermodal market. “Everyone is chomping at the bit to find ways around Chicago, and I cannot imagine Jim Vena getting into all of this without wanting to make his mark,” Tonsager said. “For example, Red Bull ships a lot from Phoenix to Philadelphia, but they don’t want to mess around with the railroad on this lane. We don’t know how much density is possible on such a lane, but with data and artificial intelligence, it’ll be much easier to find untapped opportunities.” He also sees potential to expand international intermodal business. “It’s inherent on the railroads to open up these opportunities and not be the historical barrier that they’ve been,” he said. “Would you spend $80 billion and just go ‘Okay, well I’m just going to operate the way I’ve always operated?’ I seriously doubt that. This is where the STB [Surface Transportation Board] can step in and push on the UP.” Federal regulators have the authority to impose conditions on major mergers. Railroads must show that a deal serves the public interest, reduces highway congestion and promotes competition. Other railroads, as well as non-intermodal shippers, are likely to use a possible merger as an opportunity to seek concessions from UP in exchange for public support. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

Union Pacific Railroad (UP) and Norfolk Southern (NS) confirmed Thursday they are in “advanced discussions” on a possible merger to create a transcontinental railroad, although UP officials declined to offer further details during a second-quarter earnings call. UP CEO Jim Vena cautioned that there are no assurances a deal will be reached. Any tie-up between the two railroads would be classified as a “major transaction” under US Surface Transportation Board regulations and subject to a rigorous review that could take two to three years. “We didn’t wake up one morning and say we’re going to do something like we just announced that we’re in discussion,” Vena told analysts. “We’ve done a lot of homework to get us to this place.” Vena declined to say how close the companies are to a deal or whether they have contacted federal regulators or the White House. “If you fundamentally have a railroad that’s operating the way we operate, then you can do things that help the nation, help our customers win, and that’s what it’s all about,” he said. “Everything else in the world is moving ahead ... If you stand still, you get left behind.” If a deal between UP and NS is announced and approved, it could benefit shippers of industrial and bulk goods, according to industry analysts with experience at Class I railroads. One analyst, who did not want to be identified, said the biggest gains would go to so-called “watershed” customers, meaning shippers that are located close to the operational networks of two railroads. Many of those shippers currently use trucks to avoid the delays and complications of handing freight between rail carriers. Differing views on intermodal impact A transaction between the two Class I railroads would benefit Hub Group, Swift Intermodal, and parcel giant UPS , which partner with both Union Pacific and Norfolk Southern. But analysts differ on whether a transcontinental railroad would ease congestion in cities such as Chicago, Memphis and Kansas City, where trains are broken up and containers exchanged between carriers. UP and rival BNSF Railway build West Coast trains bound for Chicago with freight destined for both the Chicagoland area and the East Coast. Ramp workers must break up the trains, sort and organize the containers, then mount the boxes into a stack or route them to NS or CSX for onward delivery. It’s not unlike how dockworkers separate containers for local delivery from those headed inland, then further divide loads between railroads and move them to on-dock yards. Ted Prince, CEO of Tri-Cities Intermodal, said he doesn’t believe much would change in gateway cities under a UP-NS merger. “The situation today in Chicago is not going to be any different after [a] merger,” Prince said. “A container traveling from Los Angeles to Philadelphia is still going to be sliced and diced in Chicago.” Prince also downplayed any impact on international intermodal freight, noting that ocean carriers tend to avoid expensive land-bridge routes in favor of all-water service to East Coast ports, followed by shorter drays. ‘Untapped opportunities’ for intermodal But Paul Tonsager, a former Canadian National Railway executive, believes a potential merger could have an impact on the intermodal market. “Everyone is chomping at the bit to find ways around Chicago, and I cannot imagine Jim Vena getting into all of this without wanting to make his mark,” Tonsager said. “For example, Red Bull ships a lot from Phoenix to Philadelphia, but they don’t want to mess around with the railroad on this lane. We don’t know how much density is possible on such a lane, but with data and artificial intelligence, it’ll be much easier to find untapped opportunities.” He also sees potential to expand international intermodal business. “It’s inherent on the railroads to open up these opportunities and not be the historical barrier that they’ve been,” he said. “Would you spend $80 billion and just go ‘Okay, well I’m just going to operate the way I’ve always operated?’ I seriously doubt that. This is where the STB [Surface Transportation Board] can step in and push on the UP.” Federal regulators have the authority to impose conditions on major mergers. Railroads must show that a deal serves the public interest, reduces highway congestion and promotes competition. Other railroads, as well as non-intermodal shippers, are likely to use a possible merger as an opportunity to seek concessions from UP in exchange for public support. Contact Ari Ashe at ari.ashe@spglobal.com .

Surface

Rail News

North-American rail

Intermodal providers

UP confirms in ‘advanced discussions’ on deal with Norfolk Southern

<div class="phx-topic abstract-wrapper">The negative foreign exchange effects were most noticeable in the forwarder’s US dollar-denominated ocean freight business, where earnings fell sharply in the second quarter.</div>

The negative foreign exchange effects were most noticeable in the forwarder’s US dollar-denominated ocean freight business, where earnings fell sharply in the second quarter.

<div class="phx-topic">Kuehne + Nagel (K+N) Thursday reported above-market share growth in both air and ocean volumes in the first half of the year, although foreign currency headwinds weighed on the forwarder’s financial results. The negative foreign exchange effects were most noticeable in US dollar-denominated ocean freight. Despite a 20% increase in first-half ocean revenue to $5.9 billion and an 11% increase in second-quarter revenue to $2.8 billion, K+N’s earnings before interest and taxes (EBIT) in the ocean segment fell 5% year over year to $462 million in the first half and slid 16% to $98 million in the second quarter. Markus Blanka-Graff, CFO for Swiss-based Kuehne + Nagel, described the currency headwinds as “one of the most significant developments” this year. “Since ‘Liberation Day’ at the start of Q2, we have seen the devaluation of our key functional currencies, the US dollar and Euro, relative to our reporting currency, the Swiss franc,” Blanka-Graff told analysts on a first-half earnings call, referring to the launch of the Trump administration’s new tariff policy. “The average exchange rate for these currencies declined by 8% and 4% year over year, respectively,” he added. “This resulted in a 6% EBIT headwind in the second quarter alone, or 3% on a half-year basis.” Total first-half revenue was up 12% at $15.7 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) increased 4% to $1.5 billion, although overall EBIT fell 1% to $937 million and net profit slid 1% to $700 million. While Kuehne + Nagel has maintained its full-year profitability forecast, the currency effect saw the forwarder adjusting its EBIT guidance range from $1.9 billion to $2.2 billion to $1.8 billion to $2 billion. <h3>‘Solid operational performance’ </h3>Although the negative foreign exchange effects undermined its earnings, Kuehne + Nagel CEO Stefan Paul said the forwarder put in a “solid operational performance” in the first half. In the volatile demand and rate environment that followed President Donald Trump’s April 2 “Liberation Day,” when tariffs were rolled out on the US’ trading partners, Paul said Kuehne + Nagel was able to offset declining ocean volumes to and from the US with gains in other markets. Overall container volume rose 4% year over year in the first half to 2.1 million TEUs against market growth of 1%, with Kuehne + Nagel also reporting “substantial market share gains” on the trade route from Asia to Europe. “We gained a significant amount of new businesses in the RFQ [request for quotation] season during the first half and we are confident we will see the same pattern in the third and the fourth quarters,” Paul said. <h3>Strong growth in air cargo </h3>K+N’s air cargo division delivered a robust performance. Revenue of $4.6 billion in the first six months was up 11% year over year and EBITA rose 9% to $1 billion. EBIT was up 13% at $289 million while volume increased 7% year over year to 1.1 million tons. The market growth in air cargo in the first half was about 4%, Paul noted. Kuehne + Nagel reported strong growth in volume in most of its air freight verticals, particularly perishables, semiconductors and “hyperscalers” — IT equipment providing the cloud infrastructure that powers modern digital applications and services. Paul said hyperscalers was “a promising field” that Kuehne + Nagel was actively pursuing, with “quite a few” people from the high-tech sector employed by the company in the past few weeks to grow the business. “This vertical ... is growing significantly and we expect it will bring high single-digit growth to the air freight business going into the fourth quarter,” he said. Meanwhile, subdued demand in European markets dragged down earnings in K+N’s road logistics business. Revenue was flat year over year at $2.2 billion, but EBIT plunged 26% to $59 million. The acquisition of Spanish groupage logistics provider TDN was completed at the end of the second quarter, enabling Kuehne + Nagel to expand its regional coverage on the Iberian Peninsula. In K+N’s contract logistics division, the second quarter was the strongest in the history of the business unit, with revenue growing 5% year over year to just shy of $3 billion. However, foreign exchange effects saw EBIT falling 2% year over year to $125 million. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Kuehne + Nagel (K+N) Thursday reported above-market share growth in both air and ocean volumes in the first half of the year, although foreign currency headwinds weighed on the forwarder’s financial results. The negative foreign exchange effects were most noticeable in US dollar-denominated ocean freight. Despite a 20% increase in first-half ocean revenue to $5.9 billion and an 11% increase in second-quarter revenue to $2.8 billion, K+N’s earnings before interest and taxes (EBIT) in the ocean segment fell 5% year over year to $462 million in the first half and slid 16% to $98 million in the second quarter. Markus Blanka-Graff, CFO for Swiss-based Kuehne + Nagel, described the currency headwinds as “one of the most significant developments” this year. “Since ‘Liberation Day’ at the start of Q2, we have seen the devaluation of our key functional currencies, the US dollar and Euro, relative to our reporting currency, the Swiss franc,” Blanka-Graff told analysts on a first-half earnings call, referring to the launch of the Trump administration’s new tariff policy. “The average exchange rate for these currencies declined by 8% and 4% year over year, respectively,” he added. “This resulted in a 6% EBIT headwind in the second quarter alone, or 3% on a half-year basis.” Total first-half revenue was up 12% at $15.7 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) increased 4% to $1.5 billion, although overall EBIT fell 1% to $937 million and net profit slid 1% to $700 million. While Kuehne + Nagel has maintained its full-year profitability forecast, the currency effect saw the forwarder adjusting its EBIT guidance range from $1.9 billion to $2.2 billion to $1.8 billion to $2 billion. ‘Solid operational performance’ Although the negative foreign exchange effects undermined its earnings, Kuehne + Nagel CEO Stefan Paul said the forwarder put in a “solid operational performance” in the first half. In the volatile demand and rate environment that followed President Donald Trump’s April 2 “Liberation Day,” when tariffs were rolled out on the US’ trading partners, Paul said Kuehne + Nagel was able to offset declining ocean volumes to and from the US with gains in other markets. Overall container volume rose 4% year over year in the first half to 2.1 million TEUs against market growth of 1%, with Kuehne + Nagel also reporting “substantial market share gains” on the trade route from Asia to Europe. “We gained a significant amount of new businesses in the RFQ [request for quotation] season during the first half and we are confident we will see the same pattern in the third and the fourth quarters,” Paul said. Strong growth in air cargo K+N’s air cargo division delivered a robust performance. Revenue of $4.6 billion in the first six months was up 11% year over year and EBITA rose 9% to $1 billion. EBIT was up 13% at $289 million while volume increased 7% year over year to 1.1 million tons. The market growth in air cargo in the first half was about 4%, Paul noted. Kuehne + Nagel reported strong growth in volume in most of its air freight verticals, particularly perishables, semiconductors and “hyperscalers” — IT equipment providing the cloud infrastructure that powers modern digital applications and services. Paul said hyperscalers was “a promising field” that Kuehne + Nagel was actively pursuing, with “quite a few” people from the high-tech sector employed by the company in the past few weeks to grow the business. “This vertical ... is growing significantly and we expect it will bring high single-digit growth to the air freight business going into the fourth quarter,” he said. Meanwhile, subdued demand in European markets dragged down earnings in K+N’s road logistics business. Revenue was flat year over year at $2.2 billion, but EBIT plunged 26% to $59 million. The acquisition of Spanish groupage logistics provider TDN was completed at the end of the second quarter, enabling Kuehne + Nagel to expand its regional coverage on the Iberian Peninsula. In K+N’s contract logistics division, the second quarter was the strongest in the history of the business unit, with revenue growing 5% year over year to just shy of $3 billion. However, foreign exchange effects saw EBIT falling 2% year over year to $125 million. Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo

Air Cargo Forwarder News

Forwarding

Post-tariff foreign currency headwinds hit Kuehne + Nagel’s H1, Q2 profit

<div class="phx-topic abstract-wrapper">Local freight forwarders have reported rate increases in the range of $300 to $500 per FEU month over month and expect further slight gains if the pace of demand remains steady.</div>

Local freight forwarders have reported rate increases in the range of $300 to $500 per FEU month over month and expect further slight gains if the pace of demand remains steady.

<div class="phx-topic">Container lines active on the India-Europe trades have been able to push short-term contract and spot rates noticeably higher in July, thanks to elevated bookings powered by the onset of peak shipping season, albeit milder than the normal pattern. Local freight forwarders have reported rate increases in the range of $300 to $500 per FEU month over month and expect further slight gains if the pace of demand remains steady. Sources who spoke with the Journal of Commerce pegged average booking prices from West India (Nhava Sheva/Mundra) to Felixstowe/London Gateway or Rotterdam at between $1,700 and $1,800 per TEU and $2,000 and $2,100 per FEU. Most premier services have their vessels fully booked to their westbound allocations for the next two weeks at least, according to forwarder sources. Sporadic schedule disruptions have in some part contributed to the space pressure. CMA CGM, which had a void call on its premier “Epic” routing last week, has suspended spot bookings for Indian loads to North Europe until the end of July, sources said. “Spot space on other India-Europe connections, including the Gemini network, is also either tight or sold out on their upcoming sailings as carriers are increasingly prioritizing service contract customers for the peak season,” a sales executive at a Mumbai-based forwarding house who did not want to be identified told the Journal of Commerce. “Vessels for August are also filling fast, so carriers are constantly adjusting spot rates.” Forwarders also believe anticipated overbooked sailings have the potential to cause cargo rollovers through the first half of August. <h3>Hapag-Lloyd plans Aug. 1 rate hike </h3>Meanwhile, Hapag-Lloyd plans to roll a $500-per-container increase into its published tariff rates for India-North Europe/Mediterranean trades beginning Aug 1. Maersk and CMA CGM set new freight-all-kinds (FAK) rates on July 15 with increases of the same level. Sources also said several carriers, particularly Hapag-Lloyd and Maersk, are experiencing tight availability of 20-foot boxes in Nhava Sheva and across certain inland container depots (ICDs) in northern India. August FAK rates published by Hapag-Lloyd for Nhava Sheva-North Europe bookings seem to reflect that scenario — at $2,139 per TEU and $1,778 per FEU. “For now, rates appear to be stable and slightly climbing, but much will depend on carriers’ vessel blanking strategies for August,” a second forwarder said. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

Container lines active on the India-Europe trades have been able to push short-term contract and spot rates noticeably higher in July, thanks to elevated bookings powered by the onset of peak shipping season, albeit milder than the normal pattern. Local freight forwarders have reported rate increases in the range of $300 to $500 per FEU month over month and expect further slight gains if the pace of demand remains steady. Sources who spoke with the Journal of Commerce pegged average booking prices from West India (Nhava Sheva/Mundra) to Felixstowe/London Gateway or Rotterdam at between $1,700 and $1,800 per TEU and $2,000 and $2,100 per FEU. Most premier services have their vessels fully booked to their westbound allocations for the next two weeks at least, according to forwarder sources. Sporadic schedule disruptions have in some part contributed to the space pressure. CMA CGM, which had a void call on its premier “Epic” routing last week, has suspended spot bookings for Indian loads to North Europe until the end of July, sources said. “Spot space on other India-Europe connections, including the Gemini network, is also either tight or sold out on their upcoming sailings as carriers are increasingly prioritizing service contract customers for the peak season,” a sales executive at a Mumbai-based forwarding house who did not want to be identified told the Journal of Commerce. “Vessels for August are also filling fast, so carriers are constantly adjusting spot rates.” Forwarders also believe anticipated overbooked sailings have the potential to cause cargo rollovers through the first half of August. Hapag-Lloyd plans Aug. 1 rate hike Meanwhile, Hapag-Lloyd plans to roll a $500-per-container increase into its published tariff rates for India-North Europe/Mediterranean trades beginning Aug 1. Maersk and CMA CGM set new freight-all-kinds (FAK) rates on July 15 with increases of the same level. Sources also said several carriers, particularly Hapag-Lloyd and Maersk, are experiencing tight availability of 20-foot boxes in Nhava Sheva and across certain inland container depots (ICDs) in northern India. August FAK rates published by Hapag-Lloyd for Nhava Sheva-North Europe bookings seem to reflect that scenario — at $2,139 per TEU and $1,778 per FEU. “For now, rates appear to be stable and slightly climbing, but much will depend on carriers’ vessel blanking strategies for August,” a second forwarder said. Contact Bency Mathew at bencyvmathew@gmail.com .

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India-Europe rates strengthen on peak season space demand, capacity cuts

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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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