<div class="phx-topic abstract-wrapper">An unknown but growing number of exporters and importers are cheating the government of billions eac</div>

An unknown but growing number of exporters and importers are cheating the government of billions eac

<div>An unknown but growing number of exporters and importers are cheating the government of billions each year in tax revenue. They do this by grossly overstating the value of their imports, understating the value of products they export, or both. By inflating their costs and understating their income they are able to evade paying taxes on a massive scale.The U.S. government, which has known about the widespread fraud in ''transfer pricing'' for some time, has finally started to do something about it. But more needs to be done.John Zdanowicz, a professor of finance at Florida International University in Miami, and...

An unknown but growing number of exporters and importers are cheating the government of billions each year in tax revenue. They do this by grossly overstating the value of their imports, understating the value of products they export, or both. By inflating their costs and understating their income they are able to evade paying taxes on a massive scale. The U.S. government, which has known about the widespread fraud in ''transfer pricing'' for some time, has finally started to do something about it. But more needs to be done.John Zdanowicz, a professor of finance at Florida International University in Miami, and his colleague Simon J. Pak, have been tracking pricing anomalies in trade for years. They estimate the U.S. Treasury was shortchanged by some $46 billion in tax revenue in 1995 alone. Their computer program allows them to sift through the millions of trade data gathered by the U.S. Customs and pick out, for example, raw cane sugar coming from the Caribbean at $600 per pound. Recognizing the enormous size of the problem, the Comptroller of the Currency late last year put import-export companies on the list of ''high risk entities'' and advised banks to be on the lookout for ''unusual pricing features'' in their transactions. Customs itself is paying much closer attention to export and import pricing and is joining the enforcement authorities in prosecuting tax evasion cases. But that's just the beginning. According to Charles Intriago, a former federal prosecutor and now publisher of the monthly ''Money Laundering Alert,'' aberrant pricing of exports and imports is among the ''top two or three'' ways to launder money. However, current federal law does not allow the tax cheats to be prosecuted as money launderers. So they are able to get away with a relatively minor penalty for tax evasion, escaping the stiff prison terms imposed on money launderers. Congress should amend the law to include tax evasion among the ''unlawful activity'' punishable under the money laundering statute. This law also should be made applicable to large-scale tax evasion schemes usually operated through a network of shell companies. In addition, the government should make much greater use of the Florida researchers' system for detecting pricing anomalies. Federal prosecutors have called them as experts in criminal tax evasion cases, and several foreign governments are using their research to detect tax cheats within their trading community. But the U.S. government is by far the biggest loser in the export-import scam. It needs additional weapons to fight the growing problem of criminal transfer pricing.

FLEECING THE GOVERNMENT

<div class="phx-topic abstract-wrapper">The new rule, a second attempt at requiring the so-called ABC test for workers in the state, has drawn opposition from multiple groups, with port trucking among the affected industries.</div>

The new rule, a second attempt at requiring the so-called ABC test for workers in the state, has drawn opposition from multiple groups, with port trucking among the affected industries.

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<div class="phx-topic">A second attempt at requiring New Jersey employers to test whether their workers are employees or independent contractors is again raising concerns about the impact on port truckers. This time, though, legislators are readily joining with drayage carriers to question potential economic harm under the proposal. The New Jersey Department of Labor and Workforce Development finished a 90-day comment period on Wednesday over a proposed rule that would require use of the so-called “ABC” test for determining whether a worker is a full-time employee or an independent contractor.The ABC test, which looks at factors such as the kind of work, how it’s done and who supervises it, undergirds <a href="https://www.joc.com/article/trucker-classification-effort-ripe-for-national-expansion-5197032">California’s AB5 law</a> passed in 2019. AB5 imposed a higher hurdle on the state’s trucking industry for using independent owner-operators as drivers. That same year, <a href="https://www.joc.com/article/njs-classification-bill-dead-for-now-but-will-return-senator-5196905">New Jersey’s legislature failed to pass a similar law</a> codifying use of the ABC test. However, the state Labor Department proposed in May adding a rule that would require using the ABC test, saying the rule was necessary due to recent court cases of misclassification. The Labor Department did not say how many comments it received about the rule. But one group – Save Independent Work – said it received 18,000 comments for submission opposing the rule. New Jersey has about 1.7 million independent contractors. As with the earlier attempted legislation, the Labor Department’s proposed rule drew opposition from the state’s drayage carriers, which rely on about 8,300 independent contractor drivers at the Port of New York and New Jersey. Lisa Yakomin, president of the Association of Bi-State Motor Carriers, said during public testimony in Trenton in June the rule would “paralyze the regional supply chain.” “Previous attempts to enshrine the Labor Department’s narrow application of the ABC test have been soundly rejected by the state legislature,” Yakomin said during her testimony. “This new rulemaking ignores that opposition and bypasses the authority of our state’s elected legislative representatives.” Other port stakeholders joined to oppose the new rule, including the Shipping Association of New York and New Jersey and the Maritime Association of the Port of New York and New Jersey (MAPONYNJ), which said disrupting the business model for port truckers would hurt supply chains.“Rather than protecting independent contractors, the proposal would effectively eliminate their ability to operate,” MAPONYNJ said in its comments. The proposed rule did draw support from the groups aligned with labor unions, such as the Economic Policy Institute and Human Rights Watch, which highlighted how delivery and rideshare drivers in Texas only earn about $5 per hour due to being classified as independent contractors. <h3>No timeline for decision</h3>The decision to adopt the rule rests largely with Robert Asaro-Angelo, the state’s labor commissioner and an appointee of New Jersey Gov. Phil Murphy, a Democrat.There is no timeline for when Asaro-Angelo must decide on whether to implement the rule. Bi-State’s Yakomin told the Journal of Commerce a decision on the rule is an overhang for port truckers as the outgoing Murphy administration may try to push it through during a lame duck session“If Asaro-Angelo wants to move forward, there’s nothing we can do,” Yakomin said. “It would take some legislation to roll back some of the test.”However, Yakomin said that this second attempt at implementing the ABC test has drawn more opposition from other New Jersey legislators, especially Democratic legislators who have typically been more friendly to unions and other labor groups. State Sen. Angela McKnight, a Democrat representing the area around the marine terminal in Bayonne, said in a letter to the Labor Department this month the proposed rule “could have serious unintended economic consequences” at the NY-NJ port and could “push drivers to relocate to less restrictive states.” Democratic State Sen. John Burzichelli, who took over the seat vacated by the senator who sponsored the original ABC legislation in 2019, also said in comments about the rule that he’s heard from constituents that the rule would be “detrimental.”“It’s great to see how many legislators have expressed concerns about the rule,” Yakomin said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a> </div>

A second attempt at requiring New Jersey employers to test whether their workers are employees or independent contractors is again raising concerns about the impact on port truckers. This time, though, legislators are readily joining with drayage carriers to question potential economic harm under the proposal. The New Jersey Department of Labor and Workforce Development finished a 90-day comment period on Wednesday over a proposed rule that would require use of the so-called “ABC” test for determining whether a worker is a full-time employee or an independent contractor. The ABC test, which looks at factors such as the kind of work, how it’s done and who supervises it, undergirds California’s AB5 law passed in 2019. AB5 imposed a higher hurdle on the state’s trucking industry for using independent owner-operators as drivers. That same year, New Jersey’s legislature failed to pass a similar law codifying use of the ABC test. However, the state Labor Department proposed in May adding a rule that would require using the ABC test, saying the rule was necessary due to recent court cases of misclassification. The Labor Department did not say how many comments it received about the rule. But one group – Save Independent Work – said it received 18,000 comments for submission opposing the rule. New Jersey has about 1.7 million independent contractors. As with the earlier attempted legislation, the Labor Department’s proposed rule drew opposition from the state’s drayage carriers, which rely on about 8,300 independent contractor drivers at the Port of New York and New Jersey. Lisa Yakomin, president of the Association of Bi-State Motor Carriers, said during public testimony in Trenton in June the rule would “paralyze the regional supply chain.” “Previous attempts to enshrine the Labor Department’s narrow application of the ABC test have been soundly rejected by the state legislature,” Yakomin said during her testimony. “This new rulemaking ignores that opposition and bypasses the authority of our state’s elected legislative representatives.” Other port stakeholders joined to oppose the new rule, including the Shipping Association of New York and New Jersey and the Maritime Association of the Port of New York and New Jersey (MAPONYNJ), which said disrupting the business model for port truckers would hurt supply chains. “Rather than protecting independent contractors, the proposal would effectively eliminate their ability to operate,” MAPONYNJ said in its comments. The proposed rule did draw support from the groups aligned with labor unions, such as the Economic Policy Institute and Human Rights Watch, which highlighted how delivery and rideshare drivers in Texas only earn about $5 per hour due to being classified as independent contractors. No timeline for decision The decision to adopt the rule rests largely with Robert Asaro-Angelo, the state’s labor commissioner and an appointee of New Jersey Gov. Phil Murphy, a Democrat. There is no timeline for when Asaro-Angelo must decide on whether to implement the rule. Bi-State’s Yakomin told the Journal of Commerce a decision on the rule is an overhang for port truckers as the outgoing Murphy administration may try to push it through during a lame duck session “If Asaro-Angelo wants to move forward, there’s nothing we can do,” Yakomin said. “It would take some legislation to roll back some of the test.” However, Yakomin said that this second attempt at implementing the ABC test has drawn more opposition from other New Jersey legislators, especially Democratic legislators who have typically been more friendly to unions and other labor groups. State Sen. Angela McKnight, a Democrat representing the area around the marine terminal in Bayonne, said in a letter to the Labor Department this month the proposed rule “could have serious unintended economic consequences” at the NY-NJ port and could “push drivers to relocate to less restrictive states.” Democratic State Sen. John Burzichelli, who took over the seat vacated by the senator who sponsored the original ABC legislation in 2019, also said in comments about the rule that he’s heard from constituents that the rule would be “detrimental.” “It’s great to see how many legislators have expressed concerns about the rule,” Yakomin said. Contact Michael Angell at michael.angell@spglobal.com

Drayage

North American ports

Trucking labor

New Jersey’s proposed worker classification rule hangs over port truckers

<div class="phx-topic abstract-wrapper">Shippers stand to benefit on lanes where both western US railroads are vying for market share. </div>

Shippers stand to benefit on lanes where both western US railroads are vying for market share.

<div class="phx-topic">Western US railroads BNSF Railway and Union Pacific Railroad (UP) are adding new intermodal services and expanding capacity in key domestic corridors as part of a broader effort to capture freight that might otherwise move on trucks. UP on Thursday announced an expedited intermodal service between Southern California’s Inland Empire and its Global 2 terminal in Chicago, set to begin Sept. 3. The train will operate five days per week and is designed to be 20% faster than existing lanes in a bid to attract time-sensitive freight now moving over the road, UP said. The announcement followed the formal opening of Union Pacific’s new intermodal terminal in Kansas City, which held a ribbon-cutting ceremony on Wednesday. The facility began operating in mid-July and now handles both international and domestic trains from Southern California. UP has introduced several other services in recent months, including a second train between Seattle and Chicago that began operating July 26 and a train linking Memphis and Dallas that launched in the spring. “We’re committed to capturing the over-the-road traffic and see it as a long-term growth engine for us,” Kenny Rocker, UP’s vice president of marketing and sales, told the Journal of Commerce. “You’ve seen the commitment to our intermodal business at a broad level with these investments.” BNSF, meanwhile, has also expanded its service offerings, introducing a new international intermodal lane linking Salt Lake City with ports in Northern and Southern California. Its 43-acre terminal in Salt Lake City opened July 31 after six months of development and is intended to serve importers and exporters seeking alternatives to long-haul drayage. “Our Salt Lake City service boosts competition, it speaks to our growth mindset and strengthens Utah’s role in the global supply chain,” Jon Gabriel, BNSF’s group vice president of consumer products, told the Journal of Commerce. “It’s part of our shared vision of a more connected, sustainable, cost-efficient future for moving freight.” BNSF also launched an expedited train on July 10 between Los Angeles and Houston and is exploring further expansion. While Union Pacific seeks <a href="https://www.joc.com/article/up-looks-to-create-first-coast-to-coast-railroad-with-85-billion-ns-deal-6052288">regulatory approval</a> to acquire Norfolk Southern Railway (NS), rival BNSF is working to strengthen its partnership with CSX Transportation. BNSF and CSX already operate expedited services from Southern California to Georgia, New Jersey and Ohio. While there are crew changes, there’s no work involved loading or unloading boxes, meaning the services operate largely like a single-line railroad. <h3>Competition gives shippers more options </h3>Shippers, meanwhile, stand to benefit on lanes where both railroads are vying for market share. BNSF has long held a transit-time advantage from Los Angeles to Chicago, Los Angeles to Kansas City and Seattle to Chicago; UP aims to close those gaps with its new service offerings. Conversely, BNSF is targeting corridors such as Los Angeles to Houston, where UP currently has faster service. Each must convince shippers who are already committed to intermodal why their railroad is the best option. UP has targeted cost-sensitive shippers in Kansas City by shifting origin points away from Long Beach. The new Los Angeles-to-Kansas City train departs from City of Industry, avoiding the Alameda Corridor surcharges — $62 per TEU and $81 per domestic container — that made UP’s pricing less competitive in prior years. The new Los Angeles-to-Chicago service will originate in the Inland Empire, located within Southern California’s densest concentration of warehouses. While BNSF already serves the Inland Empire via its San Bernardino terminal, UP’s expansion gives shippers in the region another option for direct service to the Midwest. The Memphis-to-Dallas train is designed in part to support eastern railroads looking to move freight from the Northeast to Dallas via Memphis, and to reposition empty containers in Memphis heading to Mexico. UP said most laden cargo will not originate in Memphis, and most empty containers will travel beyond Dallas. Meanwhile, BNSF wants not only to close the transit time gap to Houston, but also to the US Southeast, where an existing UP-NS joint service over the Meridian Speedway is the fastest option to cities such as Atlanta, Charlotte and Jacksonville. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Western US railroads BNSF Railway and Union Pacific Railroad (UP) are adding new intermodal services and expanding capacity in key domestic corridors as part of a broader effort to capture freight that might otherwise move on trucks. UP on Thursday announced an expedited intermodal service between Southern California’s Inland Empire and its Global 2 terminal in Chicago, set to begin Sept. 3. The train will operate five days per week and is designed to be 20% faster than existing lanes in a bid to attract time-sensitive freight now moving over the road, UP said. The announcement followed the formal opening of Union Pacific’s new intermodal terminal in Kansas City, which held a ribbon-cutting ceremony on Wednesday. The facility began operating in mid-July and now handles both international and domestic trains from Southern California. UP has introduced several other services in recent months, including a second train between Seattle and Chicago that began operating July 26 and a train linking Memphis and Dallas that launched in the spring. “We’re committed to capturing the over-the-road traffic and see it as a long-term growth engine for us,” Kenny Rocker, UP’s vice president of marketing and sales, told the Journal of Commerce. “You’ve seen the commitment to our intermodal business at a broad level with these investments.” BNSF, meanwhile, has also expanded its service offerings, introducing a new international intermodal lane linking Salt Lake City with ports in Northern and Southern California. Its 43-acre terminal in Salt Lake City opened July 31 after six months of development and is intended to serve importers and exporters seeking alternatives to long-haul drayage. “Our Salt Lake City service boosts competition, it speaks to our growth mindset and strengthens Utah’s role in the global supply chain,” Jon Gabriel, BNSF’s group vice president of consumer products, told the Journal of Commerce. “It’s part of our shared vision of a more connected, sustainable, cost-efficient future for moving freight.” BNSF also launched an expedited train on July 10 between Los Angeles and Houston and is exploring further expansion. While Union Pacific seeks regulatory approval to acquire Norfolk Southern Railway (NS), rival BNSF is working to strengthen its partnership with CSX Transportation. BNSF and CSX already operate expedited services from Southern California to Georgia, New Jersey and Ohio. While there are crew changes, there’s no work involved loading or unloading boxes, meaning the services operate largely like a single-line railroad. Competition gives shippers more options Shippers, meanwhile, stand to benefit on lanes where both railroads are vying for market share. BNSF has long held a transit-time advantage from Los Angeles to Chicago, Los Angeles to Kansas City and Seattle to Chicago; UP aims to close those gaps with its new service offerings. Conversely, BNSF is targeting corridors such as Los Angeles to Houston, where UP currently has faster service. Each must convince shippers who are already committed to intermodal why their railroad is the best option. UP has targeted cost-sensitive shippers in Kansas City by shifting origin points away from Long Beach. The new Los Angeles-to-Kansas City train departs from City of Industry, avoiding the Alameda Corridor surcharges — $62 per TEU and $81 per domestic container — that made UP’s pricing less competitive in prior years. The new Los Angeles-to-Chicago service will originate in the Inland Empire, located within Southern California’s densest concentration of warehouses. While BNSF already serves the Inland Empire via its San Bernardino terminal, UP’s expansion gives shippers in the region another option for direct service to the Midwest. The Memphis-to-Dallas train is designed in part to support eastern railroads looking to move freight from the Northeast to Dallas via Memphis, and to reposition empty containers in Memphis heading to Mexico. UP said most laden cargo will not originate in Memphis, and most empty containers will travel beyond Dallas. Meanwhile, BNSF wants not only to close the transit time gap to Houston, but also to the US Southeast, where an existing UP-NS joint service over the Meridian Speedway is the fastest option to cities such as Atlanta, Charlotte and Jacksonville. Contact Ari Ashe at ari.ashe@spglobal.com .

Rail News

Intermodal providers

New and faster intermodal services put BNSF, UP on hunt for truck freight

<div class="phx-topic abstract-wrapper">Globalization is accelerating on the back of the commercial success of Chinese companies that are taking market share on the global stage, according to the Maersk CEO. </div>

Globalization is accelerating on the back of the commercial success of Chinese companies that are taking market share on the global stage, according to the Maersk CEO.

<div class="phx-topic">The rapid expansion of Chinese brands across a range of industrial and consumer verticals is changing the fabric of global trade and shaping up as a new driver of demand for container shipping, according to Maersk CEO Vincent Clerc. Clerc told analysts during a first-half earnings call Thursday that up until 2021, demand was mostly in line with consumption and anything that could be offshored by Western businesses “was already being offshored.” “Now we’re seeing a different phase ... China gaining market share on the world stage, not by producing stuff for Western companies, but by having its own companies going global,” Clerc said, pointing to electric vehicles, solar panels, wind turbines, chemicals, mobile phones and electronics. “I think the fabric of global trade is changing,” he added. “If you just look at the numbers, what we’ve seen in the last two and a half years is an acceleration of globalization on the back of huge commercial success from Chinese companies that are taking market share on the global stage.” Maersk certainly saw a decoupling from the North American market in its first-half demand where the contraction in US imports was more than offset by strong growth in imports into Europe, Latin America, Western and Central Asia, and Africa. <h3>‘Sluggish US market’ </h3>Trans-Pacific demand will be further influenced by sweeping new tariffs from the US that took effect Thursday, with taxes on most of its trading partners ranging from 10% to 50%. Clerc said there would be “a continued, sluggish US market” for the rest of the year, with China remaining the engine behind stronger demand growth. “The question is whether we are in a process of rebalancing global trade, where the US basically goes a certain way with a tariff regime and China continues to gain market share,” he said. “If they [China] do that on the back of the industrial successes that they’re having, this could carry stronger market growth than anticipated for a few years.” While Clerc said the expansion of Chinese brands around the world was creating long-term demand, it could run into protectionism issues in various sectors if a country or a trading bloc’s industrial base felt threatened. “But what I know is that as long as the market works the way that the market works, there is a new driver in container demand that is adding a lot of upside potential to what we’re doing, which is moving those goods,” he said. “And this is not something that is well-factored in the scenario models going forward.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The rapid expansion of Chinese brands across a range of industrial and consumer verticals is changing the fabric of global trade and shaping up as a new driver of demand for container shipping, according to Maersk CEO Vincent Clerc. Clerc told analysts during a first-half earnings call Thursday that up until 2021, demand was mostly in line with consumption and anything that could be offshored by Western businesses “was already being offshored.” “Now we’re seeing a different phase ... China gaining market share on the world stage, not by producing stuff for Western companies, but by having its own companies going global,” Clerc said, pointing to electric vehicles, solar panels, wind turbines, chemicals, mobile phones and electronics. “I think the fabric of global trade is changing,” he added. “If you just look at the numbers, what we’ve seen in the last two and a half years is an acceleration of globalization on the back of huge commercial success from Chinese companies that are taking market share on the global stage.” Maersk certainly saw a decoupling from the North American market in its first-half demand where the contraction in US imports was more than offset by strong growth in imports into Europe, Latin America, Western and Central Asia, and Africa. ‘Sluggish US market’ Trans-Pacific demand will be further influenced by sweeping new tariffs from the US that took effect Thursday, with taxes on most of its trading partners ranging from 10% to 50%. Clerc said there would be “a continued, sluggish US market” for the rest of the year, with China remaining the engine behind stronger demand growth. “The question is whether we are in a process of rebalancing global trade, where the US basically goes a certain way with a tariff regime and China continues to gain market share,” he said. “If they [China] do that on the back of the industrial successes that they’re having, this could carry stronger market growth than anticipated for a few years.” While Clerc said the expansion of Chinese brands around the world was creating long-term demand, it could run into protectionism issues in various sectors if a country or a trading bloc’s industrial base felt threatened. “But what I know is that as long as the market works the way that the market works, there is a new driver in container demand that is adding a lot of upside potential to what we’re doing, which is moving those goods,” he said. “And this is not something that is well-factored in the scenario models going forward.” Contact Greg Knowler at greg.knowler@spglobal.com .

Maritime

Container Shipping News

Trans-Pacific

Container lines

Chinese brand expansion changing ‘fabric’ of global trade: Clerc

<div class="phx-topic abstract-wrapper">Vincent Clerc said while the solid on-time performance levels had to be maintained before any commercial discussions would be held with customers, the time was coming. </div>

Vincent Clerc said while the solid on-time performance levels had to be maintained before any commercial discussions would be held with customers, the time was coming.

<div class="phx-topic">Rate premiums could be in the cards for Gemini Cooperation customers after partners Maersk and Hapag-Lloyd delivered on their target of 90%-plus schedule reliability in the first half of the year, Maersk CEO Vincent Clerc said Thursday. The Maersk executive was in a confident mood when he addressed analysts during a first-half earnings call, noting that in the five months since the first Gemini service was phased in, the reliability has been above 90%. “Any skeptics there might have been in the market about our ability to deliver the 90% schedule reliability are gone,” Clerc said. “But now we need to sustain this for a while, and then we need to move towards a more commercial discussion. I don’t think customers have experienced this long enough that they’re ready to entertain such a discussion, but it is something that is going to come.” Data from eeSea shows that Gemini Cooperation was leading reliability among the carrier alliances up to July, but its overall on-time performance recorded by the ocean visibility provider was 84%. Gemini’s best performance was on the Europe-North America trade, where it maintained above 90% reliability throughout June and July. The new Gemini networks, which were fully phased in by June, helped drive up Maersk’s second-quarter volume by 4.2% year over year to 3.2 million FEUs, which was also a 10% improvement on the first quarter. “Gemini does not increase the size of the fleet, but it increases the amount of capacity that we can offer every week, and that’s the big part of the business case,” Clerc said. “That way we lower the unit cost by being able to load more volumes on the same size of fleet.” The increase in volume offset a 6.9% year-over-year drop in average freight rates to $2,259/FEU in the second quarter and a 9.6% decline in rates sequentially. That helped Maersk revenue in the second quarter grow 2.8% year over year to just over $13 billion, with growth reported in all the carrier’s business segments. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="008a8e1d-fe3e-4f4f-b8ad-0d13591dc98f"></dynamic-object></div>Ocean revenue increased 2.4% year over year to $8.6 billion, lifted by higher volumes and higher revenue from demurrage and detention. Logistics and services revenue was up 1% at $3.7 billion, while terminals revenue of $1.3 billion in the second quarter was an increase of 20%, driven by higher volume, higher tariffs and higher storage revenue. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 8% to $2.3 billion in the second quarter, while earnings before interest and taxes (EBIT) declined 12% to $845 million, which the carrier attributed to “lower gains on sale of assets and higher depreciation linked to capacity increases.” After tax, net profit fell 23% year over year in the second quarter to $639 million. For the first half, revenue increased 5% to $26.5 billion, EBITDA increased 34% to $5 billion and EBIT almost doubled to $2.1 billion. First-half net profit after tax of $1.8 billion was up 77% year over year. <h3>Full-year profit forecast raised </h3>The strong first half prompted Maersk to raise its full-year 2025 financial guidance, with EBITDA now expected to be between $8 billion and $9.5 billion, up from the previous forecast of $6 billion to $9 billion. The increased profit expectation is based on a boost in the carrier’s global container volume growth forecast, which has been raised to between 2% and 4%, up from a previous forecast of between negative 1% and 4%, with the improved demand coming from outside North America. Still, Clerc said achieving the upper range of the full-year outlook was heavily dependent on how the fourth quarter played out. “In the volume guidance, the 2% to 4% assumes a continued, sluggish US market for the rest of the year, but the question is, how long will the strength of exports from China to the rest of the world continue?” he told analysts. Clerc said the average spot rate at the end of the second quarter was 37% higher than at the end of the first quarter, and as long as the supporting rate environment held, the carrier’s profitability would continue. “If we suddenly see a sharp deceleration following the normal peak, or a bit of weakness from China to the rest of the world, then you could see more of an adjustment during the fourth quarter of spot rates,” he said. “Leading into contracts, that would not necessarily be great news.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Rate premiums could be in the cards for Gemini Cooperation customers after partners Maersk and Hapag-Lloyd delivered on their target of 90%-plus schedule reliability in the first half of the year, Maersk CEO Vincent Clerc said Thursday. The Maersk executive was in a confident mood when he addressed analysts during a first-half earnings call, noting that in the five months since the first Gemini service was phased in, the reliability has been above 90%. “Any skeptics there might have been in the market about our ability to deliver the 90% schedule reliability are gone,” Clerc said. “But now we need to sustain this for a while, and then we need to move towards a more commercial discussion. I don’t think customers have experienced this long enough that they’re ready to entertain such a discussion, but it is something that is going to come.” Data from eeSea shows that Gemini Cooperation was leading reliability among the carrier alliances up to July, but its overall on-time performance recorded by the ocean visibility provider was 84%. Gemini’s best performance was on the Europe-North America trade, where it maintained above 90% reliability throughout June and July. The new Gemini networks, which were fully phased in by June, helped drive up Maersk’s second-quarter volume by 4.2% year over year to 3.2 million FEUs, which was also a 10% improvement on the first quarter. “Gemini does not increase the size of the fleet, but it increases the amount of capacity that we can offer every week, and that’s the big part of the business case,” Clerc said. “That way we lower the unit cost by being able to load more volumes on the same size of fleet.” The increase in volume offset a 6.9% year-over-year drop in average freight rates to $2,259/FEU in the second quarter and a 9.6% decline in rates sequentially. That helped Maersk revenue in the second quarter grow 2.8% year over year to just over $13 billion, with growth reported in all the carrier’s business segments. Ocean revenue increased 2.4% year over year to $8.6 billion, lifted by higher volumes and higher revenue from demurrage and detention. Logistics and services revenue was up 1% at $3.7 billion, while terminals revenue of $1.3 billion in the second quarter was an increase of 20%, driven by higher volume, higher tariffs and higher storage revenue. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 8% to $2.3 billion in the second quarter, while earnings before interest and taxes (EBIT) declined 12% to $845 million, which the carrier attributed to “lower gains on sale of assets and higher depreciation linked to capacity increases.” After tax, net profit fell 23% year over year in the second quarter to $639 million. For the first half, revenue increased 5% to $26.5 billion, EBITDA increased 34% to $5 billion and EBIT almost doubled to $2.1 billion. First-half net profit after tax of $1.8 billion was up 77% year over year. Full-year profit forecast raised The strong first half prompted Maersk to raise its full-year 2025 financial guidance, with EBITDA now expected to be between $8 billion and $9.5 billion, up from the previous forecast of $6 billion to $9 billion. The increased profit expectation is based on a boost in the carrier’s global container volume growth forecast, which has been raised to between 2% and 4%, up from a previous forecast of between negative 1% and 4%, with the improved demand coming from outside North America. Still, Clerc said achieving the upper range of the full-year outlook was heavily dependent on how the fourth quarter played out. “In the volume guidance, the 2% to 4% assumes a continued, sluggish US market for the rest of the year, but the question is, how long will the strength of exports from China to the rest of the world continue?” he told analysts. Clerc said the average spot rate at the end of the second quarter was 37% higher than at the end of the first quarter, and as long as the supporting rate environment held, the carrier’s profitability would continue. “If we suddenly see a sharp deceleration following the normal peak, or a bit of weakness from China to the rest of the world, then you could see more of an adjustment during the fourth quarter of spot rates,” he said. “Leading into contracts, that would not necessarily be great news.” Contact Greg Knowler at greg.knowler@spglobal.com .

High Gemini reliability lays groundwork for premium rate discussions: Maersk CEO

<div class="phx-topic abstract-wrapper">The spot and contract savings from domestic intermodal eroded in the second quarter compared with a year ago, while the fate of the third quarter depends largely on whether volume in Southern California keeps up to support peak season surcharges.</div>

The spot and contract savings from domestic intermodal eroded in the second quarter compared with a year ago, while the fate of the third quarter depends largely on whether volume in Southern California keeps up to support peak season surcharges.

<div class="phx-topic">US shippers saved an average of 17% on spot market freight and nearly 24% on contract loads in the second quarter by using domestic intermodal instead of long-haul trucking with tepid pricing continuing through midyear, according to the latest Journal of Commerce <a href="https://www.joc.com/resources/special-reports/intermodal-savings-index">Intermodal Savings Index</a> (ISI). Intermodal contract rates were flat in the second quarter compared with a year ago — up less than 1% excluding fuel, but down less than 1% including fuel, while contract truckload rates rose between 0% and 2%. North American railroads hauled 2.12 million domestic containers in the second quarter, up 2.6% compared with a year ago, according to the Intermodal Association of North America (IANA). While the Journal of Commerce forecast calls for domestic intermodal volume to decline between 1% and 4% year over year in the third quarter, Schneider National and Hub Group said there was an uptick in demand in July. “Near-term demand trends off the West Coast are strong and we are seeing indications of an early West Coast peak season,” Hub Group CEO Phil Yeager said during an Aug. 1 earnings call. “It remains unclear how long elevated import demand will persist as we are seeing variances in forecasts by customers.” The Spot ISI averaged 117.1 in the second quarter, down from 121.9 one year ago. The Contract ISI slipped to 124.2 compared with 125.7 one year ago. Index values above 100 indicate intermodal is the more cost-effective mode. The higher the index number, the greater the savings. For example, a spot ISI of 117.1 translates to a 17.1% savings on intermodal versus truckload and a contract ISI of 124.2 implies a 24.2% savings. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="18f45e44-8027-488a-8afc-87771e60ca91"></dynamic-object></div>In terms of raw dollars, intermodal shippers saved an average of $659 per container on the spot market in the second quarter and $789 per container on the contract market. Both totals were lower than a year ago, when intermodal shippers saved $722 per container on the spot market and $938 per container on the contract market. Spot intermodal rates rose 2 cents between April and June to $1.58 per mile, while spot truckload rates rose 5 cents to $1.89 during the same period, according to the ISI. The results are seasonally normal as freight demand increases between Memorial Day and July 4th. Contract truckload rates rose 2 cents to $1.97 per mile between April and June, while contract intermodal rates also rose 2 cents to $1.49 per mile during the period. <h3>Q3 pricing </h3>While J.B. Hunt Transport Services, the largest US domestic intermodal provider, announced a <a href="https://www.joc.com/article/jb-hunt-says-surcharges-necessary-to-maintain-peak-season-service-6044880">$1,500 per container surcharge</a> last month in Southern California, the broader industry has followed with smaller hikes. Spot intermodal rates from Southern California to Atlanta, Chicago, Dallas, and Memphis have risen between $300 and $500 per container since June 1, according to the ISI, but those rate increases are consistent with prior peak seasons, which typically start in the third quarter. Last year, peak season surcharges began in mid-August, not July. Hub Group and Schneider National confirmed they’ve also put in peak season surcharges. Similar to last year, however, their surcharges are close to the broader spot rate increases, not J.B. Hunt’s higher figure. The surcharges cover how much Hub and Schneider pay to railroads and drivers to reposition empty boxes. “Our intent there is really to be able to manage our operations … and to make sure that one or a small number of customers don’t completely disrupt our network,” Jim Filter, executive vice president of Schneider, said during a July 31 earnings call. Hub Group added that while it has implemented some surcharges, it has not incorporated “significant” surcharges into its third-quarter earnings guidance. Intermodal providers must be careful about the surcharge total if there isn’t a simultaneous increase in truck rates. From Los Angeles to Dallas and Kansas City, intermodal saves about $700 to $900 per container. If surcharges are too high, shippers might tender freight back to trucking. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. The data behind the Contract ISI and Spot ISI is available to Journal of Commerce subscribers with a Gold-tier subscription. </div>

US shippers saved an average of 17% on spot market freight and nearly 24% on contract loads in the second quarter by using domestic intermodal instead of long-haul trucking with tepid pricing continuing through midyear, according to the latest Journal of Commerce Intermodal Savings Index (ISI). Intermodal contract rates were flat in the second quarter compared with a year ago — up less than 1% excluding fuel, but down less than 1% including fuel, while contract truckload rates rose between 0% and 2%. North American railroads hauled 2.12 million domestic containers in the second quarter, up 2.6% compared with a year ago, according to the Intermodal Association of North America (IANA). While the Journal of Commerce forecast calls for domestic intermodal volume to decline between 1% and 4% year over year in the third quarter, Schneider National and Hub Group said there was an uptick in demand in July. “Near-term demand trends off the West Coast are strong and we are seeing indications of an early West Coast peak season,” Hub Group CEO Phil Yeager said during an Aug. 1 earnings call. “It remains unclear how long elevated import demand will persist as we are seeing variances in forecasts by customers.” The Spot ISI averaged 117.1 in the second quarter, down from 121.9 one year ago. The Contract ISI slipped to 124.2 compared with 125.7 one year ago. Index values above 100 indicate intermodal is the more cost-effective mode. The higher the index number, the greater the savings. For example, a spot ISI of 117.1 translates to a 17.1% savings on intermodal versus truckload and a contract ISI of 124.2 implies a 24.2% savings. In terms of raw dollars, intermodal shippers saved an average of $659 per container on the spot market in the second quarter and $789 per container on the contract market. Both totals were lower than a year ago, when intermodal shippers saved $722 per container on the spot market and $938 per container on the contract market. Spot intermodal rates rose 2 cents between April and June to $1.58 per mile, while spot truckload rates rose 5 cents to $1.89 during the same period, according to the ISI. The results are seasonally normal as freight demand increases between Memorial Day and July 4th. Contract truckload rates rose 2 cents to $1.97 per mile between April and June, while contract intermodal rates also rose 2 cents to $1.49 per mile during the period. Q3 pricing While J.B. Hunt Transport Services, the largest US domestic intermodal provider, announced a $1,500 per container surcharge last month in Southern California, the broader industry has followed with smaller hikes. Spot intermodal rates from Southern California to Atlanta, Chicago, Dallas, and Memphis have risen between $300 and $500 per container since June 1, according to the ISI, but those rate increases are consistent with prior peak seasons, which typically start in the third quarter. Last year, peak season surcharges began in mid-August, not July. Hub Group and Schneider National confirmed they’ve also put in peak season surcharges. Similar to last year, however, their surcharges are close to the broader spot rate increases, not J.B. Hunt’s higher figure. The surcharges cover how much Hub and Schneider pay to railroads and drivers to reposition empty boxes. “Our intent there is really to be able to manage our operations … and to make sure that one or a small number of customers don’t completely disrupt our network,” Jim Filter, executive vice president of Schneider, said during a July 31 earnings call. Hub Group added that while it has implemented some surcharges, it has not incorporated “significant” surcharges into its third-quarter earnings guidance. Intermodal providers must be careful about the surcharge total if there isn’t a simultaneous increase in truck rates. From Los Angeles to Dallas and Kansas City, intermodal saves about $700 to $900 per container. If surcharges are too high, shippers might tender freight back to trucking. Contact Ari Ashe at ari.ashe@spglobal.com . The data behind the Contract ISI and Spot ISI is available to Journal of Commerce subscribers with a Gold-tier subscription.

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At SSA Marine Mexico, we firmly believe that business development must go hand in hand with social and environmental well-being. Our vision is not solely focused on operating efficiently, but also on creating a meaningful and positive impact in the communities where we are present. Since 1995, we have reaffirmed this commitment through tangible actions that reflect our core values of responsibility, solidarity, and sustainability. <span class="joc_admin__inline-image joc_admin__inline-image-aspect-ratio-3_2 joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left" data-figure-aspect-ratio="3:2"><img src="/content-assets/1752584535914_Photo%201.jpg" alt="" class="joc_admin__inline-image-inherit"> A Year of Major Achievements Over the past year, we allocated more than $107,000 USD to the implementation of 60 social and environmental projects, positively impacting over 7,800 people across various regions of Mexico. Each initiative was designed with a holistic approach, addressing key areas that contribute to long-term community development. Education: Laying the Foundation for the Future Education is one of the most powerful tools to promote social mobility and equitable development. At SSA Marine Mexico, we support academic initiatives that inspire and empower the next generation of leaders. One of our most impactful partnerships was with the University of Colima, where we sponsored the “Reto Camp” program. This initiative encourages university students to develop innovative solutions in the fields of sustainability, logistics, and port operations, offering them mentorship, tools, and real-world challenges to solve. In addition, we donated microscopes, school supplies, and educational materials to institutions in underserved communities, helping to improve the learning environment and provide students with the resources they need to succeed. Health and Sports: Promoting Wellness We believe that healthy communities are strong communities. We have supported several local sporting events and provided direct assistance to talented athletes, enabling them to pursue their passions and represent their regions with pride. Beyond sports, we also strengthened our collaboration with critical emergency response organizations such as the Mexican Red Cross and Civil Protection. Our contributions helped enhance their readiness and capabilities in times of crisis, ensuring better outcomes for those affected by emergencies. Supporting Vulnerable Groups: Reaching Those Who Need It Most A core part of our social responsibility efforts is directed toward supporting vulnerable populations. We have contributed to a range of initiatives focused on children, migrants, and at-risk families. These efforts included donations to orphanages and shelters, as well as support for the National Institute of Migration and grassroots organizations dedicated to protecting and empowering people facing adversity. By standing with those in need, we reinforce our commitment to inclusion and social justice, values that are central to our identity as a responsible company. <span class="joc_admin__inline-image joc_admin__inline-image-aspect-ratio-3_2 joc_admin__inline-image-position-left joc_admin__inline-image-size-medium" data-figure-size="medium" data-figure-position="left" data-figure-aspect-ratio="3:2"><img src="/content-assets/1752584944645_Photo%202.png" alt="" class="joc_admin__inline-image-inherit">Culture: Strengthening Community Identity Cultural identity is a key element in building resilient and united communities. At SSA Marine Mexico, we actively participate in the organization and sponsorship of cultural events that celebrate local traditions and foster civic pride. Working alongside port authorities and municipal governments, we helped bring music, art, and heritage to the forefront, creating spaces for community engagement and intercultural dialogue. Environment: Investing in the Planet Our commitment to sustainability goes beyond operations—it’s a philosophy that drives every decision we make. We have partnered with environmental institutions to carry out reforestation campaigns, beach cleanups, and conservation efforts. In collaboration with the Institute for the Environment, we supported initiatives aimed at decarbonization, biodiversity protection, and environmental education. By involving our employees and local volunteers in these actions, we also foster a culture of environmental stewardship throughout our organization and our surrounding communities. Innovation for a Sustainable Future Sustainability is not just about doing good—it’s also about doing things better. In 2024, we invested $22 million USD in the acquisition of 11 state-of-the-art E-RTG cranes. These electric rubber-tired gantry cranes represent a significant technological advancement in port equipment. Seven of them are already operating on clean electric energy, resulting in a reduction of nearly 4,000 tons of CO₂ emissions and improving operational efficiency by 7%. The remaining four cranes are fully compatible with future electrification, underscoring our long-term strategy to modernize our operations in an environmentally responsible way. This investment is part of a broader innovation roadmap that includes digitalization, automation, and cleaner energy sources—all designed to ensure that our ports continue to grow without compromising the health of our planet. Building a Better Tomorrow, Together At SSA Marine Mexico, we understand that sustainability is a shared and ongoing responsibility. True impact requires collaboration across sectors, long-term vision, and unwavering commitment. That is why we continue to work hand-in-hand with local authorities, non-profit organizations, universities, and our own employees to create solutions that are both scalable and sustainable. Our journey is far from over. In the years ahead, we will continue to deepen our community engagement, explore cleaner technologies, and strengthen the social fabric of the regions where we operate. Each initiative, no matter the size, is a step toward building a future where business success goes hand-in-hand with human and environmental prosperity. We are proud of what we have achieved in 2024, but we are even more excited about what lies ahead. SSA Marine Mexico — Moving the World, Caring for People and Planet. LINK: https://www.ssamarine.mx/

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