<div class="phx-topic abstract-wrapper">I recently attended the Bureau of Customs and Border Protection's fourth annual Trade Symposium, whi</div>

I recently attended the Bureau of Customs and Border Protection's fourth annual Trade Symposium, whi

<div>I recently attended the Bureau of Customs and Border Protection's fourth annual Trade Symposium, which provided a comprehensive update on the continuing evolution of the Customs-Trade Partnership Against Terrorism and the agency's cargo-security initiatives. Praise is certainly in order to Commissioner Robert Bonner, Deputy Commissioner Douglas Browning and others who contributed to this first-class event. Of all the speeches and presentations, by far the most controversial was that given by Commissioner Bonner himself. He said that the "not-too-distant-future" use of "smart" containers outfitted with intrusion-monitoring devices will not only be a prerequisite to obtaining expedited "green lane" treatment at border...

I recently attended the Bureau of Customs and Border Protection's fourth annual Trade Symposium, which provided a comprehensive update on the continuing evolution of the Customs-Trade Partnership Against Terrorism and the agency's cargo-security initiatives. Praise is certainly in order to Commissioner Robert Bonner, Deputy Commissioner Douglas Browning and others who contributed to this first-class event. Of all the speeches and presentations, by far the most controversial was that given by Commissioner Bonner himself. He said that the "not-too-distant-future" use of "smart" containers outfitted with intrusion-monitoring devices will not only be a prerequisite to obtaining expedited "green lane" treatment at border crossings but will be the "future price of admission" for companies wanting to join C-TPAT. His announcement-like remarks drew visible reactions from the audience. Numerous attendees I spoke with expressed their perplexity with what seemed to be a sudden and almost forceful embrace of smart-container technology, and the perception that the promised "carrot" was continuing to be moved. At face value, any perceived over-reliance on technology will most always raise suspicion, because technology in and of itself is rarely a complete solution. Whether hardware or software, technology's role is traditionally that of "process enabler," designed to either make an existing process more efficient or to provide capability that otherwise would be impractical to duplicate manually. But while I would agree that the statements on smart containers certainly represent a new development in the evolution of C-TPAT, I would urge that the inclusion of smart-container technology remain properly framed within the greater context of Bonner's overall security plan. Here's why. Ask most any security professional to describe the most effective security strategy and you are likely to hear the vernacular terms "layered," or "security in-depth." What these terms refer to is a methodology that incorporates complementary security controls that are sufficient to deter and detect unauthorized access, compromise, entry, movement or use. In other words, a strategy that combines the strengths of multiple barriers typically comprising people, processes and enabling technology. Bonner's vision of a comprehensive cargo-security program uses just such a methodology by layering five concentric controls in which the cargo originates at a C-TPAT-approved or equivalent vendor; uses a smart container; is shipped through a Container Security Initiative port; is carried by a C-TPAT-approved carrier; and is delivered to a C-TPAT-approved importer. Customs' inclusion of smart containers as a new requirement for obtaining C-TPAT green-lane benefits certainly raises the bar for participation. It also raises the question as to whether its additional cost will serve to tip the scales just enough to discourage some additional companies from joining. While the answer may be yes, it may also be a moot point. The greatest risk remains with the thousands of smaller importers who lack any incentive to implement or enforce a cargo-security program, or the desire and capability to participate in C-TPAT. These are the very companies that represent the "path of least resistance" that terrorists are known to be probing. Therefore, the key to success will be in Customs' ability to make good on its much-promised and -touted benefits of expedited entry processing for C-TPAT cargoes. But these benefits must be tangible and quantifiable - something I have stressed in The Journal of Commerce as far back as a column in the December 2001 issue. Conversely, the negative impact to non-participants must be equally convincing - together, this carrot and stick form the very business case for compelling companies to participate. And because Customs remains the "gatekeeper" for roughly 40 other government agencies, the processes controlled by these departments, such as the Food and Drug Administration, will need to be equally efficient and not negate a company's investment in C-TPAT. Additionally, Customs' own credibility will be at stake; there are still far too many companies that cavalierly dismiss the threat of Customs enforcement of statutory trade requirements, let alone a voluntary program. Perhaps the stronger language that Bonner used in his recent speech actually represents the beginning of a change in Customs' policy. While Customs prefers a voluntary partnership with trade, a tougher message is emerging: If you're not part of the solution then you're part of the problem, and there will be a price to pay. William G. "Jerry" Peck is president and founder of Global Trade Management Solutions. He can be reached at (815) 462-1732, or via e-mail at wgpeck@global-trade-ms.com .

Customs' new tone

<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.

Feature image

<div class="phx-topic">Union Pacific Railroad and Norfolk Southern confirmed Thursday they are in “advanced discussions” on a possible merger to create a transcontinental railroad, though 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 like 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 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 and Norfolk Southern confirmed Thursday they are in “advanced discussions” on a possible merger to create a transcontinental railroad, though 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 like 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 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 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 Q2. 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 H1 revenue was up 12% at $15.7 billion and 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-$2.2 billion to $1.8 billion-$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 around 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 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 Q2. 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 H1 revenue was up 12% at $15.7 billion and 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-$2.2 billion to $1.8 billion-$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 around 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 .

Maritime

Air Cargo

Container Shipping News

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 .

Container lines

Asia-Europe

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

<div class="phx-topic abstract-wrapper">The Asian Development Bank also warned in a note Wednesday that escalating tariffs and further trade friction would further dim intra-Asia growth prospects. </div>

The Asian Development Bank also warned in a note Wednesday that escalating tariffs and further trade friction would further dim intra-Asia growth prospects.

<div class="phx-topic">Intra-Asia trade risks being thrown into chaos if the US imposes hefty tariffs on goods from the region should current trade talks break down, Hutchison Port Holdings Trust (HPH Trust) warned Wednesday. While the Singapore-listed port operator, a subsidiary of Hong Kong conglomerate CK Hutchison, was commenting before the Trump administration announced trade deals with three Asian countries — Japan, Indonesia and the Philippines — late Tuesday in the US, those countries still face significant levies on exports to the US. The Asian Development Bank also warned in a note Wednesday that escalating tariffs and further trade friction would further dim intra-Asia growth prospects. HPH Trust, which controls Hutchison’s Hong Kong and mainland China port interests, said the US government sent letters to several counties in Asia to increase pressure on them to conclude trade negotiations by an Aug. 1 deadline. “If these trade deals fail to materialize, the sudden reinstatement of higher tariffs and possible sectoral tariffs by the US could trigger fresh turmoil in global trade, particularly for intra-Asia trade,” HPH Trust said. The warning was included as part of the company’s first-half results announcement. In the agreements confirmed Wednesday, Japanese exports to the US will be charged a 15% tariff, down from a proposed 25% levy, while a 19% tariff will be added to imports from the Philippines. Indonesia will also have a 19% tariff added to its exports to the US, although that is down from the 32% the US said it would apply without a deal. But other major Asian exporters to the US, including South Korea and Thailand, have yet to agree to trade deals. South Korea and Malaysia both face a 25% tariff, with Thailand and Cambodia each looking at a 36% levy. Myanmar and Laos would have exports to the US taxed at 40%. Officials from the US and China, meanwhile, are due to meet next week in Stockholm to continue talks on a trade deal, <a href="https://www.reuters.com/world/china/us-china-discuss-tariff-deadline-extension-trump-reaches-philippines-deal-2025-07-22/">Reuters reported</a>. The US has imposed an Aug. 14 deadline for reaching a deal, without which Chinese goods could face a 145% US tariff. “Uneven progress in tariff negotiations and the potential expansion of tariffs to additional products could further disrupt trade activities and weigh on growth for the region,” said Dong He, chief economist at the regional government-backed ASEAN+3 Macroeconomic Research Office (AMRO). AMRO is forecasting economic growth in the intra-Asia region to be 3.8% this year, slipping to 3.6% in 2026. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>.</div>

Intra-Asia trade risks being thrown into chaos if the US imposes hefty tariffs on goods from the region should current trade talks break down, Hutchison Port Holdings Trust (HPH Trust) warned Wednesday. While the Singapore-listed port operator, a subsidiary of Hong Kong conglomerate CK Hutchison, was commenting before the Trump administration announced trade deals with three Asian countries — Japan, Indonesia and the Philippines — late Tuesday in the US, those countries still face significant levies on exports to the US. The Asian Development Bank also warned in a note Wednesday that escalating tariffs and further trade friction would further dim intra-Asia growth prospects. HPH Trust, which controls Hutchison’s Hong Kong and mainland China port interests, said the US government sent letters to several counties in Asia to increase pressure on them to conclude trade negotiations by an Aug. 1 deadline. “If these trade deals fail to materialize, the sudden reinstatement of higher tariffs and possible sectoral tariffs by the US could trigger fresh turmoil in global trade, particularly for intra-Asia trade,” HPH Trust said. The warning was included as part of the company’s first-half results announcement. In the agreements confirmed Wednesday, Japanese exports to the US will be charged a 15% tariff, down from a proposed 25% levy, while a 19% tariff will be added to imports from the Philippines. Indonesia will also have a 19% tariff added to its exports to the US, although that is down from the 32% the US said it would apply without a deal. But other major Asian exporters to the US, including South Korea and Thailand, have yet to agree to trade deals. South Korea and Malaysia both face a 25% tariff, with Thailand and Cambodia each looking at a 36% levy. Myanmar and Laos would have exports to the US taxed at 40%. Officials from the US and China, meanwhile, are due to meet next week in Stockholm to continue talks on a trade deal, Reuters reported . The US has imposed an Aug. 14 deadline for reaching a deal, without which Chinese goods could face a 145% US tariff. “Uneven progress in tariff negotiations and the potential expansion of tariffs to additional products could further disrupt trade activities and weigh on growth for the region,” said Dong He, chief economist at the regional government-backed ASEAN+3 Macroeconomic Research Office (AMRO). AMRO is forecasting economic growth in the intra-Asia region to be 3.8% this year, slipping to 3.6% in 2026. Contact Keith Wallis at keithwallis@hotmail.com .

Transport, Trade and Regulation News

Intra-Asia trade faces fresh turmoil from potential hefty US tariffs: HPH Trust

<div class="phx-topic abstract-wrapper">In the wake of several paper mill closures globally so far this year, US pulp importers will be dealt another blow on Aug. 1 when a proposed 50% tariff on cargo from Brazil will go into effect. </div>

In the wake of several paper mill closures globally so far this year, US pulp importers will be dealt another blow on Aug. 1 when a proposed 50% tariff on cargo from Brazil will go into effect.

<div class="phx-topic">After the closure — and announcements of future closures — of more than half a dozen paper mills around the globe this year, the pulp industry will see higher costs and tightened supply when a 50% US tariff on Brazil goes into effect Aug. 1, stakeholders say. As the tariffs are implemented, the US paper pulp market is especially exposed, experts say. According to Chris Rogers, head of supply chain research at S&amp;P Global Market Intelligence, the Trump administration’s plan to apply elevated duties under the International Emergency Economic Powers Act (IEEPA) would increase import tariffs on Brazil to 50%, on Canada to 35% and to the European Union to 30%. According to S&amp;P Global Market Intelligence data, those sources together accounted for 93% of US imports of wood pulp between March and May of 2025. S&amp;P Global is the parent company of the Journal of Commerce. “[The plan] carries significant risks for the US paper manufacturing sector,” Rogers wrote in a July 16 analysis. In 2023, North America was only responsible for 10% of global wood pulp demand, according to Fastmarkets’ World Pulp &amp; Recovered Paper forecast. Meanwhile, China had 43%, Europe 24%, 13% went to the rest of Asia, Latin America had 6%, and less than 2% was bound for the rest of the world. <h3>Mill closures </h3>The global pulp industry was already facing challenges before the US tariffs were announced. Falling demand for paper products, increased consolidation across sectors and reduced margins have long impacted the industry, experts say. According to data analytics company ResourceWise, at least nine mills around the world have moved forward with closures since the beginning of 2025, including several in the US. International Paper shut down its Louisiana containerboard mill in April, while Georgia-Pacific announced it would close its Georgia containerboard mill in August. Similarly, Smurfit WestRock this year closed its Minnesota coated recycle board mill and ceased production at its Texas-based containerboard mill, while Greif permanently closed two recycled paperboard mills in California and Massachusetts, ResourceWise shows. “Many chemical pulp mills in USA and Canada [have] shut down due to high cost and low margins,” said a paper pulp logistics market source. “Future capacity growth will come from Brazil, Indonesia, and Chile due to the low cost of wood and production.” A Tako board mill in Finland owned by Metsa Board and a UPM Communication Papers paper mill in Germany also closed this year. Several of the closure announcements, both in North America and internationally, cited weak demand and high operating costs as contributing factors, according to ResourceWise. <h3>Volatility instead of stabilization </h3>According to paper industry consultant EMGE’s Paper and Pulp Industry Outlook 2025, there were expectations for the paper and board sector to stabilize “somewhat” this year, but tariff announcements have only increased volatility. US imports of wood pulp fell 4.7% year over year in May, according to Rogers’ analysis. That figure includes a 19.9% slide in imports from Canada and a 6.3% drop from the EU, reflecting the different tariff rates applied under the IEEPA (deficit) and IEEPA (fentanyl) programs, including the delayed implementation of higher duties until Aug. 1, he wrote. “The US is a key destination for Brazilian pulp, and any shift in trade policy could influence global supply chains,” Fastmarkets pulp analyst Mateus Saraiva said in a July 14 Fastmarkets article. “Other exporters with lower tariff exposure may gain competitive advantage, while downstream industries such as tissue and packaging could face cost pressures. Currency movements and freight rates may further shape the net impact on landed costs.” According to Parsan Chand Mahaveer, a logistics specialist in the paper pulp industry, some shippers frontloaded their cargo to beat the approaching Aug. 1 deadline, although moving cargo earlier than usual bears its own costs. “Frontloading in volumes to the US incurs extra holding costs ranging from $30 to $50 per ton,” Mahaveer told the Journal of Commerce. “Some shippers are also circumventing tariffs by diversifying end markets and changing their supply sources, [if possible.]” Importers who do get hit with the tariff will likely be forced to shoulder the additional costs directly, ultimately positioning importers to pass on price increases to the consumer. “Most of the pulp on long term commercial agreement is being sold on [a cost, insurance, and freight] basis in the US and any impact is being absorbed by importers in the US,” Mahaveer said. “Pulp producers who import their own pulp into [the US] and distribute by themselves, they absorb the tariff impact.” Still, some sectors of the pulp industry are more exposed than others. According to Fastmarkets, more than 82% of bleached eucalyptus kraft pulp (BEKP) imported into the US comes from Brazil. BEKP, largely favored for its short life span and high quality for kraft pulping, is a type of bleached hardwood kraft (BHK) pulp, which accounted for 55% of global pulp demand in 2023, according to Fastmarkets. Meanwhile, bleached softwood kraft (BSK) — which is more commonly available in North America than BHK — accounted for 26% of global pulp demand in 2023. Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com.">laura.robb@spglobal.com</a>.  </div>

After the closure — and announcements of future closures — of more than half a dozen paper mills around the globe this year, the pulp industry will see higher costs and tightened supply when a 50% US tariff on Brazil goes into effect Aug. 1, stakeholders say. As the tariffs are implemented, the US paper pulp market is especially exposed, experts say. According to Chris Rogers, head of supply chain research at S&P Global Market Intelligence, the Trump administration’s plan to apply elevated duties under the International Emergency Economic Powers Act (IEEPA) would increase import tariffs on Brazil to 50%, on Canada to 35% and to the European Union to 30%. According to S&P Global Market Intelligence data, those sources together accounted for 93% of US imports of wood pulp between March and May of 2025. S&P Global is the parent company of the Journal of Commerce. “[The plan] carries significant risks for the US paper manufacturing sector,” Rogers wrote in a July 16 analysis. In 2023, North America was only responsible for 10% of global wood pulp demand, according to Fastmarkets’ World Pulp & Recovered Paper forecast. Meanwhile, China had 43%, Europe 24%, 13% went to the rest of Asia, Latin America had 6%, and less than 2% was bound for the rest of the world. Mill closures The global pulp industry was already facing challenges before the US tariffs were announced. Falling demand for paper products, increased consolidation across sectors and reduced margins have long impacted the industry, experts say. According to data analytics company ResourceWise, at least nine mills around the world have moved forward with closures since the beginning of 2025, including several in the US. International Paper shut down its Louisiana containerboard mill in April, while Georgia-Pacific announced it would close its Georgia containerboard mill in August. Similarly, Smurfit WestRock this year closed its Minnesota coated recycle board mill and ceased production at its Texas-based containerboard mill, while Greif permanently closed two recycled paperboard mills in California and Massachusetts, ResourceWise shows. “Many chemical pulp mills in USA and Canada [have] shut down due to high cost and low margins,” said a paper pulp logistics market source. “Future capacity growth will come from Brazil, Indonesia, and Chile due to the low cost of wood and production.” A Tako board mill in Finland owned by Metsa Board and a UPM Communication Papers paper mill in Germany also closed this year. Several of the closure announcements, both in North America and internationally, cited weak demand and high operating costs as contributing factors, according to ResourceWise. Volatility instead of stabilization According to paper industry consultant EMGE’s Paper and Pulp Industry Outlook 2025, there were expectations for the paper and board sector to stabilize “somewhat” this year, but tariff announcements have only increased volatility. US imports of wood pulp fell 4.7% year over year in May, according to Rogers’ analysis. That figure includes a 19.9% slide in imports from Canada and a 6.3% drop from the EU, reflecting the different tariff rates applied under the IEEPA (deficit) and IEEPA (fentanyl) programs, including the delayed implementation of higher duties until Aug. 1, he wrote. “The US is a key destination for Brazilian pulp, and any shift in trade policy could influence global supply chains,” Fastmarkets pulp analyst Mateus Saraiva said in a July 14 Fastmarkets article. “Other exporters with lower tariff exposure may gain competitive advantage, while downstream industries such as tissue and packaging could face cost pressures. Currency movements and freight rates may further shape the net impact on landed costs.” According to Parsan Chand Mahaveer, a logistics specialist in the paper pulp industry, some shippers frontloaded their cargo to beat the approaching Aug. 1 deadline, although moving cargo earlier than usual bears its own costs. “Frontloading in volumes to the US incurs extra holding costs ranging from $30 to $50 per ton,” Mahaveer told the Journal of Commerce. “Some shippers are also circumventing tariffs by diversifying end markets and changing their supply sources, [if possible.]” Importers who do get hit with the tariff will likely be forced to shoulder the additional costs directly, ultimately positioning importers to pass on price increases to the consumer. “Most of the pulp on long term commercial agreement is being sold on [a cost, insurance, and freight] basis in the US and any impact is being absorbed by importers in the US,” Mahaveer said. “Pulp producers who import their own pulp into [the US] and distribute by themselves, they absorb the tariff impact.” Still, some sectors of the pulp industry are more exposed than others. According to Fastmarkets, more than 82% of bleached eucalyptus kraft pulp (BEKP) imported into the US comes from Brazil. BEKP, largely favored for its short life span and high quality for kraft pulping, is a type of bleached hardwood kraft (BHK) pulp, which accounted for 55% of global pulp demand in 2023, according to Fastmarkets. Meanwhile, bleached softwood kraft (BSK) — which is more commonly available in North America than BHK — accounted for 26% of global pulp demand in 2023. Contact Laura Robb at laura.robb@spglobal.com . 

Supply chain

Impending Brazil tariffs increase pressure on US pulp industry

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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. 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Shippers save money, time with automated transportation bidding tools

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