<div class="phx-topic abstract-wrapper">It's an agreement that covers only 230 miles of track in western New York, but shippers say a pact s</div>

It's an agreement that covers only 230 miles of track in western New York, but shippers say a pact s

<div>It's an agreement that covers only 230 miles of track in western New York, but shippers say a pact sought by Canadian Pacific Railway and Norfolk Southern could reduce rail competition across the country. Looking to drive down costs and streamline operations, the railroads are asking for approval of an agreement to allow NS to haul freight for CP between Binghamton and Buffalo, N.Y., over CP's Delaware &amp; Hudson Railway subsidiary, a company seeking to provide the service said. Bridgewater, N.J.-based CNJ Rail, a shortline holding company, is appealing a Surface Transportation Board decision that denied CNJ Rail an Offer...

It's an agreement that covers only 230 miles of track in western New York, but shippers say a pact sought by Canadian Pacific Railway and Norfolk Southern could reduce rail competition across the country. Looking to drive down costs and streamline operations, the railroads are asking for approval of an agreement to allow NS to haul freight for CP between Binghamton and Buffalo, N.Y., over CP's Delaware & Hudson Railway subsidiary, a company seeking to provide the service said. Bridgewater, N.J.-based CNJ Rail, a shortline holding company, is appealing a Surface Transportation Board decision that denied CNJ Rail an Offer of Financial Assistance to purchase the trackage rights that the CP-NS agreement would replace. If STB's rejection of the OFA stands, CNJ Rail says railroads would be allowed to discontinue service where they employ trackage rights over another carrier or require shippers to subsidize the service through higher rates. "Unless other shippers come forward to voice their concerns about this appeal, it could have drastic consequences across the country," said Eric Strohmeyer, president of CNJ Rail. "This would mean that shippers in Colorado and Utah captive to Union Pacific could lose their only source of competition if (BNSF Railway) finds it necessary to abandon any of the 4,000 miles of trackage rights over UP" granted to them in the UP-Southern Pacific merger in 1996. A shipper who requested anonymity and is undecided on whether to endorse the agreement said it raises questions, but he's "still not convinced" there won't be competitive impact later. "This could eliminate a potential bottleneck between NS and CP and potentially save several days on transit times," he said. "Then again, if CP elected to use this deal as a way of exiting the market, then yes, a competitive option is being lost. But I don't know CP's intentions." The CP-NS haulage agreement is part of a larger deal that the companies unveiled in July that allowed CP to avoid selling off its under-performing D&H. Instead of an outright sale, CP and NS struck several transactions involving trackage and haulage rights, which presumably would allow them to better use each other's assets. CP and NS say the new trackage rights arrangements would trigger increased competition because they would improve efficiency and profitability. CP could not be reached for comment on the marketing plans for D&H. However, some say the CP-NS haulage and trackage agreements may not be enough to make the D&H viable. One Wall Street analyst has said that despite any cost gains from the agreements, the D&H would likely remain a high-cost operation, estimating it would retain a lofty 90 percent operating ratio. CP's overall operating ratio was 79.8 in 2004. The CP-NS deal raised little concern from shippers when it was filed at the STB in October. Only the United Transportation Union - which, along with anti-competitive groups, was concerned about potential job losses - and the Owego and Harford Railway, a 27-mile short line, protested. Owego and Harford, which connects to the D&H and NS, feared its shippers would lose a competitive option if CP decided to retreat from the line. It was only after the STB rejected CNJ's OFA -- which offered to buy the trackage rights for $125,000 -- that shipper concern increased, which was attributed in part to Strohmeyer's efforts. "I've been trying to make shippers aware of the impact this could have down the road," he said. He asked the National Industrial Transportation League to weigh in on his appeal and "at least request more time so that they can take a look at the potential effects," he said. NITL's attorney, Nick DiMichael, said "there have been discussions about the issue" at the league, and it is considering whether to file a petition in the case.

Rail News

Competition's Single Track?

<div class="phx-topic abstract-wrapper">The rapidly unfolding situation in Iran and threatened US military action there is posing a “real and significant” risk that attacks on merchant shipping in the region will resume, according to the head of the Global Shippers’ Forum. </div>

The rapidly unfolding situation in Iran and threatened US military action there is posing a “real and significant” risk that attacks on merchant shipping in the region will resume, according to the head of the Global Shippers’ Forum. 

Feature image

<div class="phx-topic">Plans by ocean carriers to step up their resumption of Red Sea transits should be put on hold with escalating protests in Iran and direct military intervention threatened by the US representing a real security risk to the region, the Global Shippers’ Forum (GSF) warned Wednesday. While attacks on commercial shipping by Iran-sponsored Houthi militants in Yemen have quieted since October when a ceasefire was agreed to between Israel and Hamas, the rapidly unfolding situation in Iran could easily change that, GSF Director James Hookham said. “The risk of the Houthi resuming attacks on merchant shipping as a political response to any foreign intervention in Iran must be real and significant,” Hookham told the Journal of Commerce. Ocean carriers have been increasing their transits via the Suez and Red Sea recently, encouraged by the absence of Houthi attacks that began in late 2023 and forced lengthy diversions around southern Africa. A Red Sea diversion tracker launched Wednesday by maritime consultancy Drewry found that over the past few weeks some major carriers have joined their smaller regional counterparts in routing vessels through the Red Sea. Their data shows 26 container ships – the highest number in five weeks – sailed through the Suez Canal in the week ended Jan. 11. Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce contributor, said of the major carriers, CMA CGM was leading the pack and has been gradually increasing the number of services it operates through the Red Sea.  “The only two main Asia-Europe services that still don't fully use the Red Sea are their FAL1 and FAL3 where they go through on the backhaul but not on the head-haul,” Jensen told a webinar organized by visibility provider . "Maersk has had two trial shipments, one on Dec. 19 and another this week, calling them trial shipments,” he added. “They won't say when the next ones are, but it's clear that they are testing the waters.” Maersk has <a href="Maersk set to resume regular Suez transits on India-USEC 'MECL' loop: sources | Journal of Commerce">actually finalized operational plans to reinstate regular sailings</a> on its India-US East Coast “MECL” network to the traditional — and significantly shorter — Red Sea/Suez Canal route following the two uneventful trial passages over the past month, multiple sources told the Journal of Commerce. The normal schedule will take effect with a late January or early February vessel departure out of India.Hookham, however, noted that carriers have made it clear they would not return until the risks were almost negligible because they would not want to resume sailings and then be forced to re-divert back around southern Africa. "They set a very high bar for a return, virtually requiring ‘peace in the Middle East’ before they go back,” he said. “If they resume despite the situation in Iran, my question is why did they not return three months ago when the risk situation was probably lower than it is now?” US threats should be taken seriously Human rights groups report thousands dead in Tehran’s crackdown on the protests, sparking a response from US President Donald Trump, who promised “help is on the way” with his national security team meeting Wednesday to discuss options.  What form any US intervention will take was not disclosed, but Hookham said the overt threats of military intervention by the US should be taken seriously following Washington’s capture and removal of Venezuelan President Nicolás Maduro on Jan. 3. “All I have heard are the heavily qualified statements by Houthi spokespeople at the end of last year saying they would cease their attacks for now but will maintain their readiness and capabilities should the current situation change,” Hookham said. “There must be a very high risk it’s about to.” What is certain is that a heavily disrupted period will accompany a widescale return of voyages to the Red Sea and Suez, whenever it comes, with Jensen saying shippers can count on congestion across European hubs, soaring rates and plunging reliability until vessel schedules stabilize. “An inevitable effect is the first vessels that go through the Suez will overtake some of the vessels going around Africa, and that is going to create congestion issues up in Europe,” he said, pointing to the congestion and high rates that followed the start of the Red Sea attacks in late 2023.  How severe the congestion becomes depends on how rapidly carriers switch to the shorter route, but Jensen said the slow transition planned by carriers is likely to fail, largely because of shipper behavior. “It is likely quite a few shippers are going to prioritize the sudden ability to have their cargo moved on the shorter route where there will be a sharp increase in demand and a drop in demand for the services going around Africa,” Jensen told the webinar.  The rising demand for the Suez route will lead to an increase in rates, while carriers will need to shift capacity to the shorter route faster than planned to handle the volume, he noted. "If you look over the last two years at the ongoing Red Sea crisis, rapid changes in freight rates were the name of the game, and it can happen in just one or two weeks where rates expand by a few $1,000 per container,” Jensen said. “We might see similar moves here, with a huge arbitrage suddenly between the short and the longer routes.”  Another change Jensen said shippers should consider in their supply chain planning is that during the transition from the around-Africa voyages to Suez transits, vessel schedule reliability will drop by 30 to 35 percentage points. As the new networks fall into place, the on-time performance will gradually begin to recover to levels in place before the Houthi attacks began, he noted. “But once we are through this extremely turbulent changeover period and things have again stabilized, we will be in a state of global overcapacity,” Jensen warned. “There is no doubt about that.”  Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>.  </div>

Plans by ocean carriers to step up their resumption of Red Sea transits should be put on hold with escalating protests in Iran and direct military intervention threatened by the US representing a real security risk to the region, the Global Shippers’ Forum (GSF) warned Wednesday.  While attacks on commercial shipping by Iran-sponsored Houthi militants in Yemen have quieted since October when a ceasefire was agreed to between Israel and Hamas, the rapidly unfolding situation in Iran could easily change that, GSF Director James Hookham said.  “The risk of the Houthi resuming attacks on merchant shipping as a political response to any foreign intervention in Iran must be real and significant,” Hookham told the Journal of Commerce.  Ocean carriers have been increasing their transits via the Suez and Red Sea recently, encouraged by the absence of Houthi attacks that began in late 2023 and forced lengthy diversions around southern Africa.  A Red Sea diversion tracker launched Wednesday by maritime consultancy Drewry found that over the past few weeks some major carriers have joined their smaller regional counterparts in routing vessels through the Red Sea. Their data shows 26 container ships – the highest number in five weeks – sailed through the Suez Canal in the week ended Jan. 11.  Lars Jensen, CEO of Vespucci Maritime and a Journal of Commerce contributor, said of the major carriers, CMA CGM was leading the pack and has been gradually increasing the number of services it operates through the Red Sea.   “The only two main Asia-Europe services that still don't fully use the Red Sea are their FAL1 and FAL3 where they go through on the backhaul but not on the head-haul,” Jensen told a webinar organized by visibility provider .  "Maersk has had two trial shipments, one on Dec. 19 and another this week, calling them trial shipments,” he added. “They won't say when the next ones are, but it's clear that they are testing the waters.”  Maersk has actually finalized operational plans to reinstate regular sailings on its India-US East Coast “MECL” network to the traditional — and significantly shorter — Red Sea/Suez Canal route following the two uneventful trial passages over the past month, multiple sources told the Journal of Commerce. The normal schedule will take effect with a late January or early February vessel departure out of India. Hookham, however, noted that carriers have made it clear they would not return until the risks were almost negligible because they would not want to resume sailings and then be forced to re-divert back around southern Africa.  "They set a very high bar for a return, virtually requiring ‘peace in the Middle East’ before they go back,” he said. “If they resume despite the situation in Iran, my question is why did they not return three months ago when the risk situation was probably lower than it is now?”  US threats should be taken seriously  Human rights groups report thousands dead in Tehran’s crackdown on the protests, sparking a response from US President Donald Trump, who promised “help is on the way” with his national security team meeting Wednesday to discuss options.   What form any US intervention will take was not disclosed, but Hookham said the overt threats of military intervention by the US should be taken seriously following Washington’s capture and removal of Venezuelan President Nicolás Maduro on Jan. 3.  “All I have heard are the heavily qualified statements by Houthi spokespeople at the end of last year saying they would cease their attacks for now but will maintain their readiness and capabilities should the current situation change,” Hookham said. “There must be a very high risk it’s about to.”  What is certain is that a heavily disrupted period will accompany a widescale return of voyages to the Red Sea and Suez, whenever it comes, with Jensen saying shippers can count on congestion across European hubs, soaring rates and plunging reliability until vessel schedules stabilize.  “An inevitable effect is the first vessels that go through the Suez will overtake some of the vessels going around Africa, and that is going to create congestion issues up in Europe,” he said, pointing to the congestion and high rates that followed the start of the Red Sea attacks in late 2023.   How severe the congestion becomes depends on how rapidly carriers switch to the shorter route, but Jensen said the slow transition planned by carriers is likely to fail, largely because of shipper behavior.  “It is likely quite a few shippers are going to prioritize the sudden ability to have their cargo moved on the shorter route where there will be a sharp increase in demand and a drop in demand for the services going around Africa,” Jensen told the webinar.   The rising demand for the Suez route will lead to an increase in rates, while carriers will need to shift capacity to the shorter route faster than planned to handle the volume, he noted.  "If you look over the last two years at the ongoing Red Sea crisis, rapid changes in freight rates were the name of the game, and it can happen in just one or two weeks where rates expand by a few $1,000 per container,” Jensen said. “We might see similar moves here, with a huge arbitrage suddenly between the short and the longer routes.”   Another change Jensen said shippers should consider in their supply chain planning is that during the transition from the around-Africa voyages to Suez transits, vessel schedule reliability will drop by 30 to 35 percentage points. As the new networks fall into place, the on-time performance will gradually begin to recover to levels in place before the Houthi attacks began, he noted.  “But once we are through this extremely turbulent changeover period and things have again stabilized, we will be in a state of global overcapacity,” Jensen warned. “There is no doubt about that.”   Contact Greg Knowler at  greg.knowler@spglobal.com .   

Asia-Europe

Container Shipping News

Maritime

Regional security risk too high to consider Red Sea return: global shipper group 

<div class="phx-topic abstract-wrapper">The move follows the successful trial transits of the Maersk Sebarok in December and the Maersk Denver, which sailed through the waterway this week.</div>

The move follows the successful trial transits of the Maersk Sebarok in December and the Maersk Denver, which sailed through the waterway this week.

<div class="phx-topic">Maersk has finalized operational plans to reinstate regular sailings on its India-US East Coast “MECL” network to the traditional — and significantly shorter — Red Sea/Suez Canal route following two uneventful trial passages over the past month, multiple sources told the Journal of Commerce. The normal schedule will take effect with a late January or early February vessel departure out of India. “The MECL is going to go via the Suez on a permanent basis soon,” said a Maersk Middle East executive who did not want to be identified. Officially, the carrier declined to confirm details of the India/Suez plans when contacted by the Journal of Commerce. “We cannot comment on specific vessels’ schedules and potential deviations,” Maersk said. Following the successful transit of the Maersk Sebarok through the Suez and Red Sea in December, the carrier sent the Maersk Denver through the waterway this week; both vessels are part of the MECL service linking India to the US East Coast (USEC). <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="ae1df54b-4003-46b5-a8c3-e0d35707e941"></dynamic-object></div>Major carriers have mostly avoided the Red Sea and Suez Canal since late 2023 when Houthi militants operating in Yemen began their attacks on commercial shipping to protest Israel’s move into Gaza. The weekly MECL features three ports of call out of West India — Mundra, Pipavav and Nhava Sheva. But the Danish liner has declared omissions to Mundra and Pipavav on two upcoming MECL voyages, the Maersk Hartford in Week 3 and the Maersk Chicago in Week 5. Grape cargo bookings for Europe Although Maersk <a href="https://www.joc.com/article/unexpected-margin-boost-in-q3-2025-to-lift-ocean-carriers-full-year-results-drewry-6151976">in a Jan. 12 customer advisory reiterated a “stepwise approach”</a> toward resuming Red Sea/Suez transits, there are other market signals on its firm Suez transit plans. Freight forwarder executives in Mumbai who spoke with the Journal of Commerce said the carrier has begun accepting grape cargo bookings from West India to Europe via the Suez that it is estimated will give shippers a six-day transit gain on average relative to the longer Cape of Good Hope passage, which is significant for perishables trades. Maersk will also move Indian grape containers on MECL vessels at Nhava Sheva for transshipment out of Salalah, Oman, to Rotterdam, sources said. But Maersk in a response to a Journal of Commerce query, said it had not started loading Europe cargo from India on the MECL. “We will explore it when the official [routing] changes happen,” the carrier said. The specialized reefer-centric Indian grape export trade has been a high-stakes bet for Maersk, even though it suffered marginal market share setbacks in the last season due to increased competition from Hapag-Lloyd. The Suez offering seems to be a strategic effort to regain lost volumes. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="56199e2b-5df4-468f-a149-b18ae7c32e51"></dynamic-object></div>Meanwhile, all major India-USEC carriers have reported strong cargo lifts in the current week, with most vessels overbooked due to tighter capacity stemming from smaller vessel deployments and blank sailings. CMA CGM’s first Suez-based “Indamex” westbound voyage, the CMA CGM Verdi that has an estimated departure of Jan. 17 from Nhava Sheva, has also closed bookings ahead of its declared gate cutoff, according to forwarder sources. Exports from India to the US East Coast have been on a steady decline since the middle of last year amid the tariff spat between Washington and New Delhi. Volumes into the USEC were 67,490 TEUs in November, down from 93,160 TEUs in August, according to data from PIERS, a sister product of the Journal of Commerce within S&amp;P Global. Spot rates on the trade, meanwhile, were pegged at $1,300 per FEU as of Jan. 13 by Platts, a sister company of the Journal of Commerce. That is down from $1,400 per FEU a month ago. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com.</a></div>

Maersk has finalized operational plans to reinstate regular sailings on its India-US East Coast “MECL” network to the traditional — and significantly shorter — Red Sea/Suez Canal route following two uneventful trial passages over the past month, multiple sources told the Journal of Commerce. The normal schedule will take effect with a late January or early February vessel departure out of India. “The MECL is going to go via the Suez on a permanent basis soon,” said a Maersk Middle East executive who did not want to be identified. Officially, the carrier declined to confirm details of the India/Suez plans when contacted by the Journal of Commerce. “We cannot comment on specific vessels’ schedules and potential deviations,” Maersk said. Following the successful transit of the Maersk Sebarok through the Suez and Red Sea in December, the carrier sent the Maersk Denver through the waterway this week; both vessels are part of the MECL service linking India to the US East Coast (USEC). Major carriers have mostly avoided the Red Sea and Suez Canal since late 2023 when Houthi militants operating in Yemen began their attacks on commercial shipping to protest Israel’s move into Gaza. The weekly MECL features three ports of call out of West India — Mundra, Pipavav and Nhava Sheva. But the Danish liner has declared omissions to Mundra and Pipavav on two upcoming MECL voyages, the Maersk Hartford in Week 3 and the Maersk Chicago in Week 5. Grape cargo bookings for Europe Although Maersk in a Jan. 12 customer advisory reiterated a “stepwise approach” toward resuming Red Sea/Suez transits, there are other market signals on its firm Suez transit plans. Freight forwarder executives in Mumbai who spoke with the Journal of Commerce said the carrier has begun accepting grape cargo bookings from West India to Europe via the Suez that it is estimated will give shippers a six-day transit gain on average relative to the longer Cape of Good Hope passage, which is significant for perishables trades. Maersk will also move Indian grape containers on MECL vessels at Nhava Sheva for transshipment out of Salalah, Oman, to Rotterdam, sources said. But Maersk in a response to a Journal of Commerce query, said it had not started loading Europe cargo from India on the MECL. “We will explore it when the official [routing] changes happen,” the carrier said. The specialized reefer-centric Indian grape export trade has been a high-stakes bet for Maersk, even though it suffered marginal market share setbacks in the last season due to increased competition from Hapag-Lloyd. The Suez offering seems to be a strategic effort to regain lost volumes. Meanwhile, all major India-USEC carriers have reported strong cargo lifts in the current week, with most vessels overbooked due to tighter capacity stemming from smaller vessel deployments and blank sailings. CMA CGM’s first Suez-based “Indamex” westbound voyage, the CMA CGM Verdi that has an estimated departure of Jan. 17 from Nhava Sheva, has also closed bookings ahead of its declared gate cutoff, according to forwarder sources. Exports from India to the US East Coast have been on a steady decline since the middle of last year amid the tariff spat between Washington and New Delhi. Volumes into the USEC were 67,490 TEUs in November, down from 93,160 TEUs in August, according to data from PIERS, a sister product of the Journal of Commerce within S&P Global. Spot rates on the trade, meanwhile, were pegged at $1,300 per FEU as of Jan. 13 by Platts, a sister company of the Journal of Commerce. That is down from $1,400 per FEU a month ago. Contact Bency Mathew at bencyvmathew@gmail.com.

Port News

Container lines

North American ports

International ports

Maersk set to resume regular Suez transits on India-USEC ‘MECL’ loop – sources

<div class="phx-topic abstract-wrapper">Cooperation in the form of steel-wheel interchange has fallen out of fashion as railroads have become less willing to do the necessary work that is intrinsic in the swap of volume on rail, according to Larry Gross.</div>

Cooperation in the form of steel-wheel interchange has fallen out of fashion as railroads have become less willing to do the necessary work that is intrinsic in the swap of volume on rail, according to Larry Gross.

<div class="phx-topic">Since the announcement of the proposed acquisition of Norfolk Southern (NS) by Union Pacific (UP), there has been a strong focus on interline intermodal. Questions are being asked as to what volume might be unlocked by greater connectivity. New interline services are being announced. Merger proponents say that single-line service is the only avenue to capturing more intermodal share. That may be true. But a big reason is that the willingness of railroads to cooperate on interline intermodal has declined over time. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6152070_0.1.jpg"></img></div>Each week, the Association of American Railroads (AAR) publishes two figures for each reporting railroad: the number of intermodal loads originated on that railroad, and the number of intermodal loads received by that railroad in interchange. Typically, the eastern rails receive a greater percentage of their volume in interchange, while the western rails originate a greater percentage. However, the sum of all loads received each week can be compared to the sum of all loads originated to determine the percentage of total intermodal activity that involves more than one railroad. The chart performs such a calculation on the AAR data dating back to 2005. The analysis clearly shows that the percentage of intermodal loads interchanged has undergone a long-term decline. In 2005, the percentage of interchanged loaded units was nearly 22%. Most recently, it has been running in the low 15% range. The percentage of loads interchanged has dropped by one-third. Clearly, cooperation, in the form of steel-wheel interchange, has fallen out of fashion. Railroads have become less willing to do the necessary work that is intrinsic in the interchange of volume on rail. Run-through trains have become scarcer. Why? Surely, precision scheduled railroading, in the form of the laser focus of railroads regarding lowering the operating ratio (OR), has played a role. The railroads have demonstrated an inability to increase volume, and rates are capped by the truck competition. The only way to lower the OR is to take out cost. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="f32c5756-9464-49af-91df-7028b9136c88"></dynamic-object></div>Putting together blocks for steel-wheel interchange requires switching, and therefore, generates costs. However, there is no direct revenue offset to the switching function performed for a connecting carrier. It is an easy decision to eliminate the steel-wheel handoff with its attendant switching costs and rely on a rubber tire transfer at the interchange point. The railroad’s cost is reduced while the revenue is retained. However, that’s not the end of the story. While the individual railroad’s cost is lower, the cost of the door-to-door intermodal move is undoubtedly raised by the inclusion of two additional terminal lifts plus the expensive crosstown dray. Costs are transferred from the railroad to the user. Some moves have been able to withstand this added cost pressure, but other moves have surely gone back to the highway. In recent times, mergers — both completed (CPKC) and announced (UP/NS) — have triggered competitive interline services in response. Examples include the Canadian National/UP/Ferromex Falcon Service between Canada and Mexico, and various recent BNSF/CSX joint services. However, we haven’t yet seen an uptick in the interchange percentage. But supply chains don’t pivot on a dime. Change generally takes time. Perhaps we will soon see the beginning of a grand reversal in this trend, and greater cooperation will become the new standard. Larry Gross is president and founder of Gross Transportation Consulting. Contact him at <a href="mailto:lawrencejgross@gmail.com">lawrencejgross@gmail.com.</a></div>

Since the announcement of the proposed acquisition of Norfolk Southern (NS) by Union Pacific (UP), there has been a strong focus on interline intermodal. Questions are being asked as to what volume might be unlocked by greater connectivity. New interline services are being announced. Merger proponents say that single-line service is the only avenue to capturing more intermodal share. That may be true. But a big reason is that the willingness of railroads to cooperate on interline intermodal has declined over time. Each week, the Association of American Railroads (AAR) publishes two figures for each reporting railroad: the number of intermodal loads originated on that railroad, and the number of intermodal loads received by that railroad in interchange. Typically, the eastern rails receive a greater percentage of their volume in interchange, while the western rails originate a greater percentage. However, the sum of all loads received each week can be compared to the sum of all loads originated to determine the percentage of total intermodal activity that involves more than one railroad. The chart performs such a calculation on the AAR data dating back to 2005. The analysis clearly shows that the percentage of intermodal loads interchanged has undergone a long-term decline. In 2005, the percentage of interchanged loaded units was nearly 22%. Most recently, it has been running in the low 15% range. The percentage of loads interchanged has dropped by one-third. Clearly, cooperation, in the form of steel-wheel interchange, has fallen out of fashion. Railroads have become less willing to do the necessary work that is intrinsic in the interchange of volume on rail. Run-through trains have become scarcer. Why? Surely, precision scheduled railroading, in the form of the laser focus of railroads regarding lowering the operating ratio (OR), has played a role. The railroads have demonstrated an inability to increase volume, and rates are capped by the truck competition. The only way to lower the OR is to take out cost. Putting together blocks for steel-wheel interchange requires switching, and therefore, generates costs. However, there is no direct revenue offset to the switching function performed for a connecting carrier. It is an easy decision to eliminate the steel-wheel handoff with its attendant switching costs and rely on a rubber tire transfer at the interchange point. The railroad’s cost is reduced while the revenue is retained. However, that’s not the end of the story. While the individual railroad’s cost is lower, the cost of the door-to-door intermodal move is undoubtedly raised by the inclusion of two additional terminal lifts plus the expensive crosstown dray. Costs are transferred from the railroad to the user. Some moves have been able to withstand this added cost pressure, but other moves have surely gone back to the highway. In recent times, mergers — both completed (CPKC) and announced (UP/NS) — have triggered competitive interline services in response. Examples include the Canadian National/UP/Ferromex Falcon Service between Canada and Mexico, and various recent BNSF/CSX joint services. However, we haven’t yet seen an uptick in the interchange percentage. But supply chains don’t pivot on a dime. Change generally takes time. Perhaps we will soon see the beginning of a grand reversal in this trend, and greater cooperation will become the new standard. Larry Gross is president and founder of Gross Transportation Consulting. Contact him at lawrencejgross@gmail.com.

North-American rail

Intermodal providers

Surface

Intermodal cooperation on rails has declined amid cost pressures

<div class="phx-topic abstract-wrapper">Technology analyst Gartner’s recent release of a report categorizing 4PL providers signals renewed interest in the concept, even as questions remain about which shippers it is best-suited for.</div>

Technology analyst Gartner’s recent release of a report categorizing 4PL providers signals renewed interest in the concept, even as questions remain about which shippers it is best-suited for.

<div class="phx-topic">A trio of external forces — tariffs, automation and cross-border e-commerce — are bringing demand for the 4PL model in global logistics back to the fore. While the 4PL concept has existed for decades, it has gone through periods of being in and out of fashion, often due to the perception that it is an extraneous layer for shippers wanting to exert more control over their third-party logistics and carrier partners. In December, technology analyst Gartner released its first “4PL Magic Quadrant,” a list of 4PL vendors that grouped players as diverse as shipping line Maersk; 3PL giants DHL, DSV, CH Robinson and Kuehne + Nagel; and asset-light 4PL specialists like 4Flow and Arvato. Resurgent interest in the 4PL model can be largely attributed to the range of disruptive dynamics facing shippers in the almost six years since the pandemic. Those dynamics were heightened by volatile US trade policy over the past year impacting the cost of goods and sourcing decisions via higher tariffs, geopolitical strife and the rise of automation recalibrating what efficiency per shipment means.  “The need for organizations to quickly develop risk-mitigating, resilient and agile logistics networks due to global disruptions is a contributing factor to the growth in demand for 4PLs,” Gartner said in its December report. The 4PL discussion has always been tinged by confusion, in part due to the nonhomogenous nature of companies providing such services, but also because 4PLs are often conflated with terms like managed transportation, lead logistics provider and control towers. Gartner tried to clarify this confusion by specifying that control towers are not the model itself, but rather a tool. “Control towers are often referred to as the ‘engines’ that drive the 4PL solution and are an important operational and data capture tool of a 4PL,” the Gartner report said. “4PLs are leveraging their control towers to increase horizontal supply chain collaboration.” <h3>3PL or 4PL dilemma </h3>The other source of confusion around the model is differentiating between 3PLs providing actual 4PL services and 3PLs providing services that appear to be 4PL services. Eric Rempel, chief innovation officer at Redwood Logistics, said 3PLs are focused on execution, while 4PLs are focused on orchestration. Redwood, cited in the Gartner report, is both a 3PL, through its US freight brokerage, and a 4PL through its platform that focuses on system and partner integration. Felix Kaemmerer, executive vice president at 4Flow, a Germany-based 4PL, said the main justification for 4PL services is a layer of neutrality that enhances risk management for shippers. “Our advice is to separate the transportation, the system and the managed services, to procure them separately so you’re not reliant and avoid that lock-in effect,” he said. “A current 3PL might not be active in that region [a shipper is expanding to], or it might be exposed to subcontracted services. And then there’s a question — maturity. It might be smarter to go with a 3PL and sort out your initial issues in a market and then move to a more neutral 4PL setup.” Kaemmerer, who has spent 15 years at 4Flow, also questioned the idea that 4PL services ever really went out of favor, versus whether the hype around the model goes in and out of fashion. “There’s never been a decline in demand for 4PL services,” he said. “Most companies use the 3PL model, and as they mature, they evaluate whether it makes sense for them to use a 4PL.” In his experience, demand has been constant from verticals like consumer-packaged goods (CPG), whereas now demand is also coming from manufacturing and packaging companies that “10 years ago didn’t know what a 4PL is.” “What’s driving the demand is a change in the manufacturing model,” he said. “Some customers producing maybe in Europe and using a global 3PL, they’re now changing into new regions, and they don’t have the transportation network in [those regions]. In combination with a pressure not to increase [headcount], outsourcing is more appealing.” The second demand driver is access to technology, Kaemmerer said.  “Implementing a [transportation management system] is not rocket science, but it’s also not their specialty,” he said. <h3>Connectivity and coordination </h3>Rempel agreed, saying Redwood has focused on the integration aspect of the 4PL offering to help shippers navigate their complicated tech infrastructure, data needs and connectivity to transportation partners. “It’s managed connectivity,” he said. “A lot of business comes from companies looking to implement a new TMS or global trade product, and most of those fail due to connectivity. It’s like when you’re renovating a house, you redo the plumbing to make it more modular and flexible.” Osi Tagger, CEO of 4PL, emphasized that the need for shippers to enter new markets to support new suppliers or customers is a key driver of business for 4PLs. “If a company wants to grow outside its borders, it needs partners,” she said. “Are they going to partner with a 3PL or 4PL? It depends on whether they expect to grow in one try or region, or they expect global growth. If it’s global, you can go with a global 3PL, but then you’re a small customer for them. Or if do it yourself, you manage it from a distance with a bunch of partners, but it’s not in your toolset to do that.” Tagger said common characteristics for customers are companies growing globally, below $2 billion in revenue and dealing with market uncertainty. Kaemmerer said two broad 4PL models exist in the market: one in which a 4PL provides and operates a TMS as the backbone of its offering, and the other in which the shippers own the TMS and want the 4PL to operate it in an outsourced model. The second model is less attractive to most 4PLs as it is “more easily replaceable and not naturally embedded into other services” the 4PL provides, Kaemmerer said. He said 4PLs have evolved into supply chain orchestration providers, where a shipper needs to bridge the gap between supply chain planning solutions and the “execution layer.” “They have a TMS, a warehouse management system, an order management system, so they have a perfect planning world,” Kaemmerer said. “But when a disruption happens, they struggle to account for that in the execution level.” Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

A trio of external forces — tariffs, automation and cross-border e-commerce — are bringing demand for the 4PL model in global logistics back to the fore.  While the 4PL concept has existed for decades, it has gone through periods of being in and out of fashion, often due to the perception that it is an extraneous layer for shippers wanting to exert more control over their third-party logistics and carrier partners.  In December, technology analyst Gartner released its first “4PL Magic Quadrant,” a list of 4PL vendors that grouped players as diverse as shipping line Maersk; 3PL giants DHL, DSV, CH Robinson and Kuehne + Nagel; and asset-light 4PL specialists like 4Flow and Arvato.  Resurgent interest in the 4PL model can be largely attributed to the range of disruptive dynamics facing shippers in the almost six years since the pandemic. Those dynamics were heightened by volatile US trade policy over the past year impacting the cost of goods and sourcing decisions via higher tariffs, geopolitical strife and the rise of automation recalibrating what efficiency per shipment means.   “The need for organizations to quickly develop risk-mitigating, resilient and agile logistics networks due to global disruptions is a contributing factor to the growth in demand for 4PLs,” Gartner said in its December report.  The 4PL discussion has always been tinged by confusion, in part due to the nonhomogenous nature of companies providing such services, but also because 4PLs are often conflated with terms like managed transportation, lead logistics provider and control towers. Gartner tried to clarify this confusion by specifying that control towers are not the model itself, but rather a tool.  “Control towers are often referred to as the ‘engines’ that drive the 4PL solution and are an important operational and data capture tool of a 4PL,” the Gartner report said. “4PLs are leveraging their control towers to increase horizontal supply chain collaboration.”  3PL or 4PL dilemma  The other source of confusion around the model is differentiating between 3PLs providing actual 4PL services and 3PLs providing services that appear to be 4PL services.  Eric Rempel, chief innovation officer at Redwood Logistics, said 3PLs are focused on execution, while 4PLs are focused on orchestration. Redwood, cited in the Gartner report, is both a 3PL, through its US freight brokerage, and a 4PL through its platform that focuses on system and partner integration.  Felix Kaemmerer, executive vice president at 4Flow, a Germany-based 4PL, said the main justification for 4PL services is a layer of neutrality that enhances risk management for shippers.  “Our advice is to separate the transportation, the system and the managed services, to procure them separately so you’re not reliant and avoid that lock-in effect,” he said. “A current 3PL might not be active in that region [a shipper is expanding to], or it might be exposed to subcontracted services. And then there’s a question — maturity. It might be smarter to go with a 3PL and sort out your initial issues in a market and then move to a more neutral 4PL setup.”  Kaemmerer, who has spent 15 years at 4Flow, also questioned the idea that 4PL services ever really went out of favor, versus whether the hype around the model goes in and out of fashion.  “There’s never been a decline in demand for 4PL services,” he said. “Most companies use the 3PL model, and as they mature, they evaluate whether it makes sense for them to use a 4PL.”  In his experience, demand has been constant from verticals like consumer-packaged goods (CPG), whereas now demand is also coming from manufacturing and packaging companies that “10 years ago didn’t know what a 4PL is.”  “What’s driving the demand is a change in the manufacturing model,” he said. “Some customers producing maybe in Europe and using a global 3PL, they’re now changing into new regions, and they don’t have the transportation network in [those regions]. In combination with a pressure not to increase [headcount], outsourcing is more appealing.”  The second demand driver is access to technology, Kaemmerer said.   “Implementing a [transportation management system] is not rocket science, but it’s also not their specialty,” he said.  Connectivity and coordination  Rempel agreed, saying Redwood has focused on the integration aspect of the 4PL offering to help shippers navigate their complicated tech infrastructure, data needs and connectivity to transportation partners.  “It’s managed connectivity,” he said. “A lot of business comes from companies looking to implement a new TMS or global trade product, and most of those fail due to connectivity. It’s like when you’re renovating a house, you redo the plumbing to make it more modular and flexible.”  Osi Tagger, CEO of 4PL, emphasized that the need for shippers to enter new markets to support new suppliers or customers is a key driver of business for 4PLs.  “If a company wants to grow outside its borders, it needs partners,” she said. “Are they going to partner with a 3PL or 4PL? It depends on whether they expect to grow in one try or region, or they expect global growth. If it’s global, you can go with a global 3PL, but then you’re a small customer for them. Or if do it yourself, you manage it from a distance with a bunch of partners, but it’s not in your toolset to do that.”  Tagger said common characteristics for customers are companies growing globally, below $2 billion in revenue and dealing with market uncertainty.  Kaemmerer said two broad 4PL models exist in the market: one in which a 4PL provides and operates a TMS as the backbone of its offering, and the other in which the shippers own the TMS and want the 4PL to operate it in an outsourced model.  The second model is less attractive to most 4PLs as it is “more easily replaceable and not naturally embedded into other services” the 4PL provides, Kaemmerer said.  He said 4PLs have evolved into supply chain orchestration providers, where a shipper needs to bridge the gap between supply chain planning solutions and the “execution layer.”  “They have a TMS, a warehouse management system, an order management system, so they have a perfect planning world,” Kaemmerer said. “But when a disruption happens, they struggle to account for that in the execution level.”  Contact Eric Johnson at  eric.johnson@spglobal.com . 

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Logistics Technology News

4PL model reemerges as disruptive market dynamics buffet shippers

<div class="phx-topic abstract-wrapper">The agreements include the construction of a dozen 18,000-TEU, LNG-powered vessels that are part of the massive $7 billion fleet renewal program the carrier unveiled in early December.</div>

The agreements include the construction of a dozen 18,000-TEU, LNG-powered vessels that are part of the massive $7 billion fleet renewal program the carrier unveiled in early December.

<div class="phx-topic">Cosco Shipping Holdings is further expanding its long-haul and feeder fleets after signing two shipbuilding orders Tuesday totaling almost $2.7 billion for 18 container ships that will be delivered in 2028 and 2029. The larger deal, worth $2.4 billion, was inked with Shanghai-headquartered Jiangnan Shipyard (Group) Co for 12 18,000-TEU liquefied natural gas-powered dual-fuel container ships, Cosco said in a Hong Kong stock exchange filing. Jiangnan Shipyard is a subsidiary of China State Shipbuilding Corporation (CSSC). The contract is the third to be awarded by Cosco Shipping to a CSSC group shipbuilder since parent company China Cosco Shipping Group and CSSC <a href="https://www.joc.com/article/cosco-shipping-inks-7-billion-deal-for-big-fleet-expansion-6131444">signed a $7 billion umbrella agreement in early December</a> for a package of 87 vessels. Two CSSC deals <a href="https://www.joc.com/article/cosco-awards-initial-newbuilding-deals-as-part-of-7-billion-fleet-expansion-6145063">were signed last week</a>. The Jiangnan Shipyard contract is the first to be awarded for LNG-fueled very-large container ships this year and further reinforces LNG as the next-generation fuel of choice for ocean carriers. Some 4.1 million TEUs of LNG-fueled container ships were on order at the end of last year, according to data from Sea-web, a sister company of the Journal of Commerce within S&amp;P Global. That compared with 2.1 million TEUs of methanol-fueled ships on order. The Cosco order also takes the total capacity of very-large container ships on order to more than 1 million TEUs, according to Sea-web data. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e8be4ac1-33cb-4758-93c4-1d0f92f52e7d"></dynamic-object></div>Cosco said Jiangnan Shipyard was chosen because it offered the most favorable terms with a shorter delivery schedule compared with two other shipyards that submitted offers. While the price per vessel was the median of the those submitted by the three builders, “it remains largely comparable to the lowest quotation,” Cosco said in Tuesday’s filing. The carrier said the ships would be deployed on east-west routes and while they would expand the Cosco group fleet, they would also replace older tonnage. <h3>Smaller deal for regional vessels </h3>The second deal Cosco signed Tuesday was for $284 million for six 3,000-TEU conventionally powered container ships that are set to be delivered between June and December 2028. The contract was inked with Cosco shipbuilding subsidiary Cosco Shipping Heavy Industry (Zhoushan) Co. in eastern China. The vessels are separate from the $7 billion shipbuilding pact China Cosco Shipping and CSSC signed in early December. Cosco said the ships will be deployed on international regional feeder routes, providing stable capacity and reducing vessel costs. They will also assist the carrier in "achieving long-term development in emerging, regional and non-China markets," Cosco said. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com.</a></div>

Cosco Shipping Holdings is further expanding its long-haul and feeder fleets after signing two shipbuilding orders Tuesday totaling almost $2.7 billion for 18 container ships that will be delivered in 2028 and 2029. The larger deal, worth $2.4 billion, was inked with Shanghai-headquartered Jiangnan Shipyard (Group) Co for 12 18,000-TEU liquefied natural gas-powered dual-fuel container ships, Cosco said in a Hong Kong stock exchange filing. Jiangnan Shipyard is a subsidiary of China State Shipbuilding Corporation (CSSC). The contract is the third to be awarded by Cosco Shipping to a CSSC group shipbuilder since parent company China Cosco Shipping Group and CSSC signed a $7 billion umbrella agreement in early December for a package of 87 vessels. Two CSSC deals were signed last week . The Jiangnan Shipyard contract is the first to be awarded for LNG-fueled very-large container ships this year and further reinforces LNG as the next-generation fuel of choice for ocean carriers. Some 4.1 million TEUs of LNG-fueled container ships were on order at the end of last year, according to data from Sea-web, a sister company of the Journal of Commerce within S&P Global. That compared with 2.1 million TEUs of methanol-fueled ships on order. The Cosco order also takes the total capacity of very-large container ships on order to more than 1 million TEUs, according to Sea-web data. Cosco said Jiangnan Shipyard was chosen because it offered the most favorable terms with a shorter delivery schedule compared with two other shipyards that submitted offers. While the price per vessel was the median of the those submitted by the three builders, “it remains largely comparable to the lowest quotation,” Cosco said in Tuesday’s filing. The carrier said the ships would be deployed on east-west routes and while they would expand the Cosco group fleet, they would also replace older tonnage. Smaller deal for regional vessels The second deal Cosco signed Tuesday was for $284 million for six 3,000-TEU conventionally powered container ships that are set to be delivered between June and December 2028. The contract was inked with Cosco shipbuilding subsidiary Cosco Shipping Heavy Industry (Zhoushan) Co. in eastern China. The vessels are separate from the $7 billion shipbuilding pact China Cosco Shipping and CSSC signed in early December. Cosco said the ships will be deployed on international regional feeder routes, providing stable capacity and reducing vessel costs. They will also assist the carrier in "achieving long-term development in emerging, regional and non-China markets," Cosco said. Contact Keith Wallis at keithwallis@hotmail.com.

Cosco inks almost $2.7 billion in deals for 18 newbuild container ships

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