<div>Copyright 2004, Traffic World, Inc.Sluggish railroad operating performance is likely to drag into first quarter of 2004, costing some railroads millions of dollars."While most railroads have shrugged off the deterioration in operating metrics as a short-term nuisance, several have disclosed that costs are running $15 to $20 million higher per quarter as a result," investment analyst James Valentine of Morgan Stanley said in a report. "We believe the poor metrics will continue to inhibit earnings leverage at the affected carriers until the core issues are resolved."Heading into the final weeks of 2003, railroad system fluidity continued to trail last year''s...

Copyright 2004, Traffic World, Inc. Sluggish railroad operating performance is likely to drag into first quarter of 2004, costing some railroads millions of dollars. "While most railroads have shrugged off the deterioration in operating metrics as a short-term nuisance, several have disclosed that costs are running $15 to $20 million higher per quarter as a result," investment analyst James Valentine of Morgan Stanley said in a report. "We believe the poor metrics will continue to inhibit earnings leverage at the affected carriers until the core issues are resolved." Heading into the final weeks of 2003, railroad system fluidity continued to trail last year''s performance. According to statistics compiled by Morgan Stanley, average train speed declined 5.9 percent year over year in mid-December, with every railroad seeing declines. Kansas City Southern Railway and Norfolk Southern continued to report the best operating metrics in the fourth quarter 2003. Morgan Stanley said KCS''s improvement was largely the result of easy comparisons to last year (when it integrated a new transportation management system) while NS "appears to be benefiting from its scheduled railroad operating philosophy," Valentine said.

Rail News

Poor service, poor earnings

<div class="phx-topic abstract-wrapper">The carrier continues to ramp up its non-ocean businesses that were acquired from Performance Team with the lease of a new warehouse located about 10 miles from the Port of Philadelphia.</div>

The carrier continues to ramp up its non-ocean businesses that were acquired from Performance Team with the lease of a new warehouse located about 10 miles from the Port of Philadelphia.

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<div class="phx-topic">Maersk has added to its North American portfolio with the lease of one of the largest warehouses in southern New Jersey. The move comes as Maersk flagged better growth in its warehousing and related businesses during its most recent earnings release. Maersk confirmed media reports that it leased the 1.2-million-square-foot Box Park Logistics Center, located about 10 miles from the Port of Philadelphia and roughly 80 miles from the Port of New York and New Jersey. The facility, built in 2023, has 215 dock doors and can be expanded by another 300,000 square feet. The region where the warehouse is located has seen new construction plummet amid increasing industrial property vacancies in the Northeast US. Commercial realtor CBRE said in May that new warehouse construction in the south New Jersey-Philadelphia metro region totaled 11.6 million square feet in the first quarter of 2025, down 25.3% from the fourth quarter of 2024. Vacancy rates for Northeast warehouses reached 7.6% in the first quarter, compared to around 3% in 2022, marking 12 quarters of increasing vacancy rates. Maersk said in its first-quarter earnings release that it expects vacancy rates to remain close to the long-term 7% average as new construction better matches demand. Maersk’s fulfillment business, comprised mostly of the <a href="https://www.joc.com/article/maersk-acquisition-deepens-north-american-warehouse-reach-5213428">former Performance Team business</a>, saw first-quarter revenue fall 7% to $1.32 billion as it reorganized its last-mile and middle-mile business in North America. However, Maersk Chief Executive Vincent Clerc said the company’s warehousing and e-commerce fulfillment “increased in volumes with growth in new customers.” Maersk’s contract logistics business was also more profitable in the 2025 first quarter, with operating profit margin reaching 4.1% from 1.5% a year earlier. Clerc said warehousing and e-commerce fulfillment helped drive the better results. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Maersk has added to its North American portfolio with the lease of one of the largest warehouses in southern New Jersey. The move comes as Maersk flagged better growth in its warehousing and related businesses during its most recent earnings release. Maersk confirmed media reports that it leased the 1.2-million-square-foot Box Park Logistics Center, located about 10 miles from the Port of Philadelphia and roughly 80 miles from the Port of New York and New Jersey. The facility, built in 2023, has 215 dock doors and can be expanded by another 300,000 square feet. The region where the warehouse is located has seen new construction plummet amid increasing industrial property vacancies in the Northeast US. Commercial realtor CBRE said in May that new warehouse construction in the south New Jersey-Philadelphia metro region totaled 11.6 million square feet in the first quarter of 2025, down 25.3% from the fourth quarter of 2024. Vacancy rates for Northeast warehouses reached 7.6% in the first quarter, compared to around 3% in 2022, marking 12 quarters of increasing vacancy rates. Maersk said in its first-quarter earnings release that it expects vacancy rates to remain close to the long-term 7% average as new construction better matches demand. Maersk’s fulfillment business, comprised mostly of the former Performance Team business , saw first-quarter revenue fall 7% to $1.32 billion as it reorganized its last-mile and middle-mile business in North America. However, Maersk Chief Executive Vincent Clerc said the company’s warehousing and e-commerce fulfillment “increased in volumes with growth in new customers.” Maersk’s contract logistics business was also more profitable in the 2025 first quarter, with operating profit margin reaching 4.1% from 1.5% a year earlier. Clerc said warehousing and e-commerce fulfillment helped drive the better results. Contact Michael Angell at michael.angell@spglobal.com .

Maritime

Container Shipping News

Port News

Port infrastructure

Container lines

Maersk’s contract logistics business adds New Jersey warehouse

<div class="phx-topic abstract-wrapper">Adding to recent capacity cutbacks, the carrier has redeployed vessels serving its premier Himalaya Express service between India, Europe and the Mediterranean onto Asian trades.</div>

Adding to recent capacity cutbacks, the carrier has redeployed vessels serving its premier Himalaya Express service between India, Europe and the Mediterranean onto Asian trades.

<div class="phx-topic">More signs are emerging of mainline operators with larger Indian market share strategically adjusting their networks amid a rush of cargo bookings out of China that is already testing supply chains at many Asian hub ports. Adding to recent capacity cutbacks on the India-US East Coast trade, Mediterranean Shipping Co. has redeployed vessels serving its premier Himalaya Express (HEX) service between India, Europe and the Mediterranean onto Asian trades, updated schedule data obtained by the Journal of Commerce shows. Out of five upcoming HEX sailings already declared for berthing at India’s Nhava Sheva Port through early July, four vessels have their origin load ports in China, reflecting large-scale cargo relay plans. For example, the MSC Sindy, due to dock at Nhava Sheva on June 5, has made calls to Shanghai, Ningbo and Singapore in what is evidently an ad-hoc rotation. “We are now seeing a lot of impromptu changes for MSC services out of India, with vessels swapped out and port calls rejigged,” a Mumbai-based freight forwarder who did not want to be identified told the Journal of Commerce. “The Asia surge seems to be driving that capacity shakeup.” Sources also noted that the Geneva-based liner is considering adding Vizhinjam Port in southern India to the HEX rotation, likely for the interim to support resurgent transshipment volumes, beginning with the MSC Nairobi X due to arrive in Nhava Sheva on June 9. With multiple changes in the cards, the service will now cover Nhava Sheva, Mundra, Vizhinjam, Sines, Valencia, Gioia Tauro, Genoa, Barcelona and Malaga, the sources said. The weekly HEX has long used a fleet of large-size vessels — averaging 15,000 TEUs in capacity — with a strong schedule reliability track record. MSC recently reset the HEX berthing window in Nhava Sheva by shifting calls from the DP World terminal to PSA International’s facility for greater operational flexibility. Additionally, MSC’s IPAK service (India-Europe) has no sailing in the current week, port berthing data indicates. Sliding vessel schedules extend to other Indian networks. A South India/North Europe/Mediterranean/Oceania loop run jointly by MSC and CMA CGM, branded as the Australia Express and NEWMO, respectively, has voided direct calls to Ennore Port (Chennai) in late May, tightening capacity out of the region that has fewer long-haul network options. “Space issues have started for bookings to Europe and we expect westbound rates to move up,” a Chennai-based forwarder said. MSC and CMA CGM have already rolled $800 per container into West India-Europe spot pricing from this week, sources said. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>.</div>

More signs are emerging of mainline operators with larger Indian market share strategically adjusting their networks amid a rush of cargo bookings out of China that is already testing supply chains at many Asian hub ports. Adding to recent capacity cutbacks on the India-US East Coast trade, Mediterranean Shipping Co. has redeployed vessels serving its premier Himalaya Express (HEX) service between India, Europe and the Mediterranean onto Asian trades, updated schedule data obtained by the Journal of Commerce shows. Out of five upcoming HEX sailings already declared for berthing at India’s Nhava Sheva Port through early July, four vessels have their origin load ports in China, reflecting large-scale cargo relay plans. For example, the MSC Sindy, due to dock at Nhava Sheva on June 5, has made calls to Shanghai, Ningbo and Singapore in what is evidently an ad-hoc rotation. “We are now seeing a lot of impromptu changes for MSC services out of India, with vessels swapped out and port calls rejigged,” a Mumbai-based freight forwarder who did not want to be identified told the Journal of Commerce. “The Asia surge seems to be driving that capacity shakeup.” Sources also noted that the Geneva-based liner is considering adding Vizhinjam Port in southern India to the HEX rotation, likely for the interim to support resurgent transshipment volumes, beginning with the MSC Nairobi X due to arrive in Nhava Sheva on June 9. With multiple changes in the cards, the service will now cover Nhava Sheva, Mundra, Vizhinjam, Sines, Valencia, Gioia Tauro, Genoa, Barcelona and Malaga, the sources said. The weekly HEX has long used a fleet of large-size vessels — averaging 15,000 TEUs in capacity — with a strong schedule reliability track record. MSC recently reset the HEX berthing window in Nhava Sheva by shifting calls from the DP World terminal to PSA International’s facility for greater operational flexibility. Additionally, MSC’s IPAK service (India-Europe) has no sailing in the current week, port berthing data indicates. Sliding vessel schedules extend to other Indian networks. A South India/North Europe/Mediterranean/Oceania loop run jointly by MSC and CMA CGM, branded as the Australia Express and NEWMO, respectively, has voided direct calls to Ennore Port (Chennai) in late May, tightening capacity out of the region that has fewer long-haul network options. “Space issues have started for bookings to Europe and we expect westbound rates to move up,” a Chennai-based forwarder said. MSC and CMA CGM have already rolled $800 per container into West India-Europe spot pricing from this week, sources said. Contact Bency Mathew at bencyvmathew@gmail.com .

Asia-Europe

MSC juggles India-Europe network rotations amid Asia cargo rush

<div class="phx-topic abstract-wrapper">Carriers are looking to ride the higher rates as long as they can before the fresh vessel capacity that is making its way to the trans-Pacific begins to dull the momentum.</div>

Carriers are looking to ride the higher rates as long as they can before the fresh vessel capacity that is making its way to the trans-Pacific begins to dull the momentum.

<div class="phx-topic">Trans-Pacific spot rates are rising at a faster clip than the pandemic-linked boom in the spring of 2021 amid a spike in imports from Asia driven by the temporary pause in tariff hikes put in place by the Trump administration. An ocean carrier executive said liners are being “very aggressive on spot rates” to capitalize on the cargo surge, with so-called general rate increases (GRIs) implemented on June 1 and two other price hikes planned for mid-June and July 1. A half-dozen forwarders told the Journal of Commerce that spot rates this week are in the low $6,000s per FEU to the US West Coast and low $7,000s to the East Coast. Rate indexes, which take a week or two to capture the full rate gains, still showed a big jump this week. Platts, a sister company of the Journal of Commerce within S&amp;P Global, listed the spot rate from Asia to the West Coast as of Monday at $5,600 per FEU, up 33% from just last week. The East Coast rate was $6,500 per FEU, up 25%. Platts data shows the West Coast spot rate has rocketed 173% higher since mid-April, with the East Coast rate doubling over that time. By comparison, as US imports from Asia began to climb in May 2021 following the COVID-related slump, spot rates to the US rose about 20% from mid-April. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e8c13a3e-9f5a-412f-8741-adbf5e1a7779"></dynamic-object></div>Carriers are looking to ride the higher rates as long as they can before the fresh vessel capacity that is making its way to the trans-Pacific in the form of extra-loaders and new services begins to dull the momentum. “It seems like the next [rate] increase or two will be the last ones,” said Jason Cook, CEO of Ardent Global Logistics. “I’m getting the impression that this capacity is already finding its way into the trade.” The new capacity is especially significant on the trade lanes from Asia to the West Coast. Carriers in June have increased capacity by 12.8% and plan another 16.5% hike in July, Alan Murphy, CEO of Sea-Intelligence Maritime Analysis, said in his Sunday Spotlight newsletter. “In total, this is an injection of 397,000 TEUs of capacity in June/July compared to the situation just three weeks ago,” Murphy said. <h3>Import surge coming to Southern California </h3>The surge in imports from Asia is tied to the Trump administration’s time-limited pause in higher tariffs. The pauses are expiring over the next two months — one on July 9 on imports from most nations except for China, and another in mid-August on the huge <a href="https://www.joc.com/article/federal-court-ruling-blocking-tariffs-resets-shipping-outlook-6013402">145% tariff on imports from China that has been reduced to 30%</a>. The White House says it is busy negotiating new trade deals in the meantime. As those deadlines approach, the import spike is manifesting itself in the Los Angeles-Long Beach port complex, which handles about 50% of US imports from Asia. According to data from both ports, the Southern California complex is projecting a huge volume of imports over the next few weeks. Los Angeles, which this week will handle about 92,000 TEUs of laden imports, is forecasting more than 103,000 TEUs next week and 112,000 TEUs in the week of June 15. Long Beach, which will handle about 75,000 import TEUs next week, is projecting imports of more than 90,000 TEUs per week during the last three weeks of June. “Clearly shippers are trying to catch up on lost time out of China,” one forwarder said. Bookings out of Southeast Asia are quite strong, while bookings from China, which spiked after the May 12 “pause” announcement, are now “slightly weaker, but nothing that will throw the trade off,” said James Caradonna, executive vice president of the forwarder Spedag America. <h3>Short, but intense, peak season expected </h3>Based on the significant level of frontloading that has already taken place from Southeast Asia and China, forwarders say this year’s peak shipping season will start earlier and be noticeably shorter than typical peak seasons, which run from August through October. “The peak season has already started,” said Christian Sur, executive vice president of ocean freight contract logistics at the forwarder Unique Logistics International. “The peak of the peak will be in the second half of June.” For that reason, carriers are attempting to maintain cargo flow and bookings from their core customers so that when imports fall off, liners will maintain what business is left for the remainder of the year, the carrier executive said. Carriers right now are slow-walking peak season surcharges (PSSs), which are applied to cargo owners’ service contracts and forwarders’ named-account (NAC) rates, even while they announce additional spot rate increases, the executive said. “The lines are very cautious about PSSs...,” the source said. Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

Trans-Pacific spot rates are rising at a faster clip than the pandemic-linked boom in the spring of 2021 amid a spike in imports from Asia driven by the temporary pause in tariff hikes put in place by the Trump administration. An ocean carrier executive said liners are being “very aggressive on spot rates” to capitalize on the cargo surge, with so-called general rate increases (GRIs) implemented on June 1 and two other price hikes planned for mid-June and July 1. A half-dozen forwarders told the Journal of Commerce that spot rates this week are in the low $6,000s per FEU to the US West Coast and low $7,000s to the East Coast. Rate indexes, which take a week or two to capture the full rate gains, still showed a big jump this week. Platts, a sister company of the Journal of Commerce within S&P Global, listed the spot rate from Asia to the West Coast as of Monday at $5,600 per FEU, up 33% from just last week. The East Coast rate was $6,500 per FEU, up 25%. Platts data shows the West Coast spot rate has rocketed 173% higher since mid-April, with the East Coast rate doubling over that time. By comparison, as US imports from Asia began to climb in May 2021 following the COVID-related slump, spot rates to the US rose about 20% from mid-April. Carriers are looking to ride the higher rates as long as they can before the fresh vessel capacity that is making its way to the trans-Pacific in the form of extra-loaders and new services begins to dull the momentum. “It seems like the next [rate] increase or two will be the last ones,” said Jason Cook, CEO of Ardent Global Logistics. “I’m getting the impression that this capacity is already finding its way into the trade.” The new capacity is especially significant on the trade lanes from Asia to the West Coast. Carriers in June have increased capacity by 12.8% and plan another 16.5% hike in July, Alan Murphy, CEO of Sea-Intelligence Maritime Analysis, said in his Sunday Spotlight newsletter. “In total, this is an injection of 397,000 TEUs of capacity in June/July compared to the situation just three weeks ago,” Murphy said. Import surge coming to Southern California The surge in imports from Asia is tied to the Trump administration’s time-limited pause in higher tariffs. The pauses are expiring over the next two months — one on July 9 on imports from most nations except for China, and another in mid-August on the huge 145% tariff on imports from China that has been reduced to 30% . The White House says it is busy negotiating new trade deals in the meantime. As those deadlines approach, the import spike is manifesting itself in the Los Angeles-Long Beach port complex, which handles about 50% of US imports from Asia. According to data from both ports, the Southern California complex is projecting a huge volume of imports over the next few weeks. Los Angeles, which this week will handle about 92,000 TEUs of laden imports, is forecasting more than 103,000 TEUs next week and 112,000 TEUs in the week of June 15. Long Beach, which will handle about 75,000 import TEUs next week, is projecting imports of more than 90,000 TEUs per week during the last three weeks of June. “Clearly shippers are trying to catch up on lost time out of China,” one forwarder said. Bookings out of Southeast Asia are quite strong, while bookings from China, which spiked after the May 12 “pause” announcement, are now “slightly weaker, but nothing that will throw the trade off,” said James Caradonna, executive vice president of the forwarder Spedag America. Short, but intense, peak season expected Based on the significant level of frontloading that has already taken place from Southeast Asia and China, forwarders say this year’s peak shipping season will start earlier and be noticeably shorter than typical peak seasons, which run from August through October. “The peak season has already started,” said Christian Sur, executive vice president of ocean freight contract logistics at the forwarder Unique Logistics International. “The peak of the peak will be in the second half of June.” For that reason, carriers are attempting to maintain cargo flow and bookings from their core customers so that when imports fall off, liners will maintain what business is left for the remainder of the year, the carrier executive said. Carriers right now are slow-walking peak season surcharges (PSSs), which are applied to cargo owners’ service contracts and forwarders’ named-account (NAC) rates, even while they announce additional spot rate increases, the executive said. “The lines are very cautious about PSSs...,” the source said. Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com . Contact Laura Robb at laura.robb@spglobal.com .

Forwarding

Trans-Pacific

Pause in tariff hikes drives big gains in trans-Pacific spot rates

<div class="phx-topic abstract-wrapper">Hauling containers between Mexico and the US comes with additional regulations and potential disruptions that could make the 95% on-time performance promise more challenging for Hunt’s new cross-border service.</div>

Hauling containers between Mexico and the US comes with additional regulations and potential disruptions that could make the 95% on-time performance promise more challenging for Hunt’s new cross-border service.

<div class="phx-topic">J.B. Hunt wants to do what few have pulled off in long-haul intermodal: achieve 95% on-time performance. That is incredibly difficult for any 2,000-mile haul, but even more so on cross-border freight in Mexico, where the journey for J.B. Hunt requires two railroads, a manual customs clearance process, and a single-track bridge that routinely clogs one of North America’s busiest trade corridors. It’s a daunting task facing the intermodal giant as it handles the first <a href="https://www.joc.com/article/jb-hunt-launching-quantum-de-mexico-for-time-sensitive-cross-border-freight-6014579">Quantum de México</a> containers in the coming months. J.B. Hunt will team up with BNSF Railway and Grupo México Transportes (GMXT), the majority owner of Mexican railroad Ferromex. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6017110_0.1.jpg"></img></div>The <a href="https://www.joc.com/article/j-b-hunt-bnsf-launch-new-intermodal-service-to-grab-time-sensitive-freight-5215574">Quantum product</a> was introduced in 2023 as a US domestic service by Hunt and BNSF, promising tight delivery windows. According to J.B. Hunt, the service has consistently met or exceeded its on-time targets, although the company declined to provide performance data. The value proposition behind Quantum is simple: promise reliability and on-time performance to shippers using a mode that has struggled with both. Intermodal rail can be fast and dependable, but every few years, service degrades significantly for a multitude of reasons. “Most customers have appointment windows, so once we understand their expectations, we design transit and pickup schedules all the way back to the initial tender,” Spencer Frazier, executive vice president of sales for J.B. Hunt, told the Journal of Commerce. “For Quantum de México, it’s how our customers define 95% on time, not Ferromex, BNSF or us.” The formula can work in the US, where BNSF and J.B. Hunt are closely aligned and can fall back on J.B. Hunt’s 19,000-truck fleet to make up for rail hiccups. Cross-border service, though, is a different beast. Nevertheless, the market potential in Mexico is significant. In 2024, Mexico’s trade surplus with the US for automotive goods hit a record $137.8 billion, a 6% increase from the previous year, according to the US Department of Commerce. Total US imports from Mexico reached $505.9 billion, up 6.4% year over year. With nearshoring trends gaining momentum, Hunt’s competitors are investing aggressively. Last October, Hub Group formed a <a href="https://www.joc.com/article/hub-group-boosts-cross-border-business-in-jv-with-mexican-dray-carrier-5745355">joint venture with Easo</a>, a leading intermodal operator in Mexico. Schneider National has expanded its relationship with Canadian Pacific Kansas City (CPKC), offering service from <a href="https://www.joc.com/article/cpkc-csx-to-launch-joint-mexico-southeast-us-service-dec-1-5790107">Mexico to the US Southeast</a>, and boasts the only single-rail service between Mexico and Chicago. <h3>Getting out of Mexico </h3>One of the most immediate hurdles for Quantum de México is the customs clearance process. Before a container can even be loaded, physical paperwork must be presented and stamped at the terminal. Outside of Monterrey, customs offices are open only during weekday business hours and a few hours on Saturdays. That leaves a narrow daily window to get freight cleared and loaded. “We’re not running Quantum de Mexico service at wacky hours when there’s no customs office open,” Luis Hernández, GMXT’s vice president of intermodal, told the Journal of Commerce. “We’re working within the existing process to clear cargo during office hours and move it accordingly.” But miss that limited processing window and achieving the service guarantee becomes difficult. If there is a problem while the train is in transit, a new set of issues arises. In the US, BNSF can unload the container and place it onto J.B. Hunt’s extensive truck fleet. In Mexico, however, J.B. Hunt does not own trucks or employ company drivers. It must rely on third-party trucking companies. Jon Gabriel, BNSF’s group vice president for consumer products, said contingency plans are ready if a disruption occurs between Monterrey and the border. “It includes lift capability at Eagle Pass [Texas] itself,” he said. “We can drop a container there and use the J.B. Hunt truck fleet to recover if something happens en route. We have many of the same levers and processes in place as we do in US.” <h3>Crossing into the US </h3>Having a backup plan in Eagle Pass is important because the US-Mexico border comes with its own set of complications. Crossing the old, single-track bridge between Piedras Negras, Mexico, and Eagle Pass requires three separate crews: a Mexican crew to bring the train to the border, a second to take it across the bridge, and a third US crew to haul it north. “Trains come to a complete stop so the hand-off crew can disembark and walk back to their side of the border,” Union Pacific wrote in a recent <a href="https://www.up.com/aboutup/community/inside_track/safer-border-operations-it-250523.htm">online post</a>. The process can take up to 40 minutes and increases the risk of cargo theft and congestion trickling down to other trains. CPKC and Schneider <a href="https://www.joc.com/article/cpkcs-bridge-expansion-boosts-us-mexico-capacity-reliability-5908449">bypass these delays entirely</a> with the bridge in Laredo that opened a second span last December. UP last month <a href="https://www.up.com/aboutup/community/inside_track/safer-border-operations-it-250523.htm">completed a pilot program</a> in which Mexican crews were allowed to bring trains directly into its Eagle Pass terminal, reducing its exposure to theft, border delays and crew changes easily taking a half hour. BNSF hasn’t tested such options with customs agencies on both sides of the border, but says the single-track bridge isn’t limiting operations. “Physical bridge capacity is not a constraint,” BNSF’s Gabriel said. “The train from Monterrey to [Fort Worth] is consistently beating its schedule. The route will not limit our ability to meet the service commitments to our customers.” Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

J.B. Hunt wants to do what few have pulled off in long-haul intermodal: achieve 95% on-time performance. That is incredibly difficult for any 2,000-mile haul, but even more so on cross-border freight in Mexico, where the journey for J.B. Hunt requires two railroads, a manual customs clearance process, and a single-track bridge that routinely clogs one of North America’s busiest trade corridors. It’s a daunting task facing the intermodal giant as it handles the first Quantum de México containers in the coming months. J.B. Hunt will team up with BNSF Railway and Grupo México Transportes (GMXT), the majority owner of Mexican railroad Ferromex. The Quantum product was introduced in 2023 as a US domestic service by Hunt and BNSF, promising tight delivery windows. According to J.B. Hunt, the service has consistently met or exceeded its on-time targets, although the company declined to provide performance data. The value proposition behind Quantum is simple: promise reliability and on-time performance to shippers using a mode that has struggled with both. Intermodal rail can be fast and dependable, but every few years, service degrades significantly for a multitude of reasons. “Most customers have appointment windows, so once we understand their expectations, we design transit and pickup schedules all the way back to the initial tender,” Spencer Frazier, executive vice president of sales for J.B. Hunt, told the Journal of Commerce. “For Quantum de México, it’s how our customers define 95% on time, not Ferromex, BNSF or us.” The formula can work in the US, where BNSF and J.B. Hunt are closely aligned and can fall back on J.B. Hunt’s 19,000-truck fleet to make up for rail hiccups. Cross-border service, though, is a different beast. Nevertheless, the market potential in Mexico is significant. In 2024, Mexico’s trade surplus with the US for automotive goods hit a record $137.8 billion, a 6% increase from the previous year, according to the US Department of Commerce. Total US imports from Mexico reached $505.9 billion, up 6.4% year over year. With nearshoring trends gaining momentum, Hunt’s competitors are investing aggressively. Last October, Hub Group formed a joint venture with Easo , a leading intermodal operator in Mexico. Schneider National has expanded its relationship with Canadian Pacific Kansas City (CPKC), offering service from Mexico to the US Southeast , and boasts the only single-rail service between Mexico and Chicago. Getting out of Mexico One of the most immediate hurdles for Quantum de México is the customs clearance process. Before a container can even be loaded, physical paperwork must be presented and stamped at the terminal. Outside of Monterrey, customs offices are open only during weekday business hours and a few hours on Saturdays. That leaves a narrow daily window to get freight cleared and loaded. “We’re not running Quantum de Mexico service at wacky hours when there’s no customs office open,” Luis Hernández, GMXT’s vice president of intermodal, told the Journal of Commerce. “We’re working within the existing process to clear cargo during office hours and move it accordingly.” But miss that limited processing window and achieving the service guarantee becomes difficult. If there is a problem while the train is in transit, a new set of issues arises. In the US, BNSF can unload the container and place it onto J.B. Hunt’s extensive truck fleet. In Mexico, however, J.B. Hunt does not own trucks or employ company drivers. It must rely on third-party trucking companies. Jon Gabriel, BNSF’s group vice president for consumer products, said contingency plans are ready if a disruption occurs between Monterrey and the border. “It includes lift capability at Eagle Pass [Texas] itself,” he said. “We can drop a container there and use the J.B. Hunt truck fleet to recover if something happens en route. We have many of the same levers and processes in place as we do in US.” Crossing into the US Having a backup plan in Eagle Pass is important because the US-Mexico border comes with its own set of complications. Crossing the old, single-track bridge between Piedras Negras, Mexico, and Eagle Pass requires three separate crews: a Mexican crew to bring the train to the border, a second to take it across the bridge, and a third US crew to haul it north. “Trains come to a complete stop so the hand-off crew can disembark and walk back to their side of the border,” Union Pacific wrote in a recent online post . The process can take up to 40 minutes and increases the risk of cargo theft and congestion trickling down to other trains. CPKC and Schneider bypass these delays entirely with the bridge in Laredo that opened a second span last December. UP last month completed a pilot program in which Mexican crews were allowed to bring trains directly into its Eagle Pass terminal, reducing its exposure to theft, border delays and crew changes easily taking a half hour. BNSF hasn’t tested such options with customs agencies on both sides of the border, but says the single-track bridge isn’t limiting operations. “Physical bridge capacity is not a constraint,” BNSF’s Gabriel said. “The train from Monterrey to [Fort Worth] is consistently beating its schedule. The route will not limit our ability to meet the service commitments to our customers.” Contact Ari Ashe at ari.ashe@spglobal.com .

Trucking News

North-American rail

Intermodal providers

Surface

Mexico presents obstacles to meeting J.B. Hunt’s ‘Quantum’ guarantee

<div class="phx-topic abstract-wrapper">Despite sustained and pending capacity injections, major liners have the ability to alleviate short-term losses and produce healthy profits, writes Jeremy Masters.</div>

Despite sustained and pending capacity injections, major liners have the ability to alleviate short-term losses and produce healthy profits, writes Jeremy Masters.

<div class="phx-topic">The next two years are widely forecast to bring some lean times to carriers — even periods of red ink. Sustained injections of tonnage — new and secondhand — and a strong order book have been encouraged by a combination of money in the bank, the need for critical mass in new alliance structures and the drive toward alternative fuels. Unless world trade growth reaches unprecedented levels, there will be significant overcapacity for an extended period. And if the Red Sea fully reopens, that overcapacity will only be exacerbated. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6016882_0.1.jpg"></img></div>Why then, should carriers be optimistic about their ability to alleviate short-term losses and produce healthy profits over the cycle? For long-term watchers of the industry, the turning point for the carriers was the bankruptcy of Hanjin in 2016. Up until that point, carriers had a very poor return on capital and very little control over their future profits in a highly fragmented industry. The COVID-19 pandemic, and more recently the Red Sea crisis, were unusual events that gave an unexpected boost to carriers’ results. But Hanjin’s collapse was the catalyst for a consolidation which, alongside organic growth of the bigger players, means that today the top five carriers control 64.5% of global capacity, according to Alphaliner, while the top 10 control 84.1%. We can only speculate on the ultimate ambitions of Mediterranean Shipping Co., but most of the rest of the top 10 have ambitious fleet expansion plans — particularly CMA CGM and Cosco Shipping. Outside the top 10, there are few carriers that have significant growth plans, so the top 10’s percentage of world fleet will continue to rise. <h3>Controlling supply — and price </h3>The degree of consolidation that has taken place does not mean that carriers can defy rate gravity if there are unbridgeable gaps between supply and demand. But it does mean that in a down market, the biggest carriers can provide leadership by withdrawing whole strings. And in an up market, the carriers can act very quickly to increase rates, and as we have seen, amass big war chests. We will see some rocky periods ahead, but the carriers’ collective ability to control the supply lever, and thus price, has significantly increased. There is the less talked about factor that has also helped control the free supply of capacity — the reduction of the non-operating carrier fleet. The non-operating fleet and the leasing companies’ container fleets can be viewed as the elastic in the container shipping industry — helping carriers to meet incremental short-term capacity needs in different geographies, but on a bigger scale providing the opportunity to launch new products, especially for asset-poor new entrants. Alphaliner recently reported that the most traded sector of the charter market — 7,000- to 9,000-TEU ships — lost a massive 2.3 million TEUs of capacity in the last five years. It further reported that more than 3.7 million TEUs of non-operating capacity was sold to end-users between Aug. 20 and March 25, although this was partially offset by 1.2 million TEUs of new capacity delivered to non-operators and 221,000 TEUs bought from end-users. The biggest buyers were MSC and CMA CGM. How does this affect the charter market, the carriers who bought the tonnage, and the fluidity of the industry? <h3>Buoyant charter market </h3>Pundits have been shocked that the charter market has stayed as buoyant as it has. The Red Sea issue, the move from three to four east-to-west carrier groupings (counting MSC as a grouping) and intermittent congestion have all been important incremental demand generators. The fact that there have been shortages of ships available for charter in non-operating fleets, however, has also been pivotal. Carriers can be more creative with surplus assets and currently, at least, can bear less-than-optimal deployments. If non-operators get in a surplus position, they may have more need to be price-reactive. Ironically, then, the loss of some of their fleet to carriers has been a good thing for those non-operators who have held onto their assets. There is now less elasticity of supply in the charter market and more capability for non-operators to hold a firm line on price even when markets appear unfavorable, although similar to their operating carrier clients, they will not ultimately defy heavy gravity. We can assume the motives of MSC, CMA CGM and others for buying secondhand tonnage in smaller sizes from non-operators was based purely on perceived low asset prices and a desire to have greater control over north-to-south trades and regional feeders. The fact that this has limited the capability and the drive of the charter market to provide sharply priced tonnage to their competitors and any aspiring new entrants is, however, a helpful bonus. Contact Jeremy Masters at <a href="https://www.joc.com/article/jeremy@shippingmastershk.com">jeremy@shippingmastershk.com</a>.</div>

The next two years are widely forecast to bring some lean times to carriers — even periods of red ink. Sustained injections of tonnage — new and secondhand — and a strong order book have been encouraged by a combination of money in the bank, the need for critical mass in new alliance structures and the drive toward alternative fuels. Unless world trade growth reaches unprecedented levels, there will be significant overcapacity for an extended period. And if the Red Sea fully reopens, that overcapacity will only be exacerbated. Why then, should carriers be optimistic about their ability to alleviate short-term losses and produce healthy profits over the cycle? For long-term watchers of the industry, the turning point for the carriers was the bankruptcy of Hanjin in 2016. Up until that point, carriers had a very poor return on capital and very little control over their future profits in a highly fragmented industry. The COVID-19 pandemic, and more recently the Red Sea crisis, were unusual events that gave an unexpected boost to carriers’ results. But Hanjin’s collapse was the catalyst for a consolidation which, alongside organic growth of the bigger players, means that today the top five carriers control 64.5% of global capacity, according to Alphaliner, while the top 10 control 84.1%. We can only speculate on the ultimate ambitions of Mediterranean Shipping Co., but most of the rest of the top 10 have ambitious fleet expansion plans — particularly CMA CGM and Cosco Shipping. Outside the top 10, there are few carriers that have significant growth plans, so the top 10’s percentage of world fleet will continue to rise. Controlling supply — and price The degree of consolidation that has taken place does not mean that carriers can defy rate gravity if there are unbridgeable gaps between supply and demand. But it does mean that in a down market, the biggest carriers can provide leadership by withdrawing whole strings. And in an up market, the carriers can act very quickly to increase rates, and as we have seen, amass big war chests. We will see some rocky periods ahead, but the carriers’ collective ability to control the supply lever, and thus price, has significantly increased. There is the less talked about factor that has also helped control the free supply of capacity — the reduction of the non-operating carrier fleet. The non-operating fleet and the leasing companies’ container fleets can be viewed as the elastic in the container shipping industry — helping carriers to meet incremental short-term capacity needs in different geographies, but on a bigger scale providing the opportunity to launch new products, especially for asset-poor new entrants. Alphaliner recently reported that the most traded sector of the charter market — 7,000- to 9,000-TEU ships — lost a massive 2.3 million TEUs of capacity in the last five years. It further reported that more than 3.7 million TEUs of non-operating capacity was sold to end-users between Aug. 20 and March 25, although this was partially offset by 1.2 million TEUs of new capacity delivered to non-operators and 221,000 TEUs bought from end-users. The biggest buyers were MSC and CMA CGM. How does this affect the charter market, the carriers who bought the tonnage, and the fluidity of the industry? Buoyant charter market Pundits have been shocked that the charter market has stayed as buoyant as it has. The Red Sea issue, the move from three to four east-to-west carrier groupings (counting MSC as a grouping) and intermittent congestion have all been important incremental demand generators. The fact that there have been shortages of ships available for charter in non-operating fleets, however, has also been pivotal. Carriers can be more creative with surplus assets and currently, at least, can bear less-than-optimal deployments. If non-operators get in a surplus position, they may have more need to be price-reactive. Ironically, then, the loss of some of their fleet to carriers has been a good thing for those non-operators who have held onto their assets. There is now less elasticity of supply in the charter market and more capability for non-operators to hold a firm line on price even when markets appear unfavorable, although similar to their operating carrier clients, they will not ultimately defy heavy gravity. We can assume the motives of MSC, CMA CGM and others for buying secondhand tonnage in smaller sizes from non-operators was based purely on perceived low asset prices and a desire to have greater control over north-to-south trades and regional feeders. The fact that this has limited the capability and the drive of the charter market to provide sharply priced tonnage to their competitors and any aspiring new entrants is, however, a helpful bonus. Contact Jeremy Masters at jeremy@shippingmastershk.com .

Current market allows top ocean carriers to strengthen long-term position

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The world of LTL is slow to embrace change. Business anachronisms permeate current supply chain processes. These vestiges of the way things used to work define the LTL freight transportation procurement process of many modern shippers.David Knuth, logistics specialist at IEWC, a global supplier of cable and wire based in Wisconsin, is happy to have modernized the RFP process, automating the entire LTL bidding procedure with Bid$ense, SMC³’s automated truckload and LTL freight transportation sourcing solution. But when prompted, he can still recall what once was.In his previous job, a large part of his duties were consumed by creating an intermodal bid package for carriers. In a spreadsheet, Knuth detailed the company’s volumes lane by lane, taking care to delete any errant keystrokes or misleading data. He would then email out the information to each carrier, taking time to respond to detailed technical questions about the spreadsheet data. Finally, he had to compile all the results, create an algorithm that would compare the carriers on each lane, and award the business.“It was a huge undertaking. It took about four months to do,” Knuth said of the old process. “It was almost a full-time job for that part of the year, every year.”In his new job at IEWC, he sat down with Bid$ense on day one and was amazed at the capabilities. Knuth had never before used a bid tool. SMC³’s latest versions of Bid$ense automate the process even further, taking truckload and LTL RFPs entirely online. The tool draws on RFP best-practices protocols to streamline the bidding communication process, enabling bidding carriers to respond accurately and promptly to shipper requests. The solution also does all the distribution work automatically, electronically submitting shipper bid data to carriers based on their actual service capabilities and performance records. Carriers are alerted with timely prompts for RFP deliverables, so shippers aren’t waiting by the phone for responses.Another benefit of automating the process is the data-cleansing assistance. When Knuth sent spreadsheets to carriers, data errors might cloud the bidding process; he might have to resend data or simply accept a price that did not truly reflect the costs of doing business. Data cleansing is incredibly beneficial, he said.The spreadsheet technique also made bidding analysis an onerous task. Since Bid$ense automates and streamlines the entire RFP process, intensive examination is now simple. SMC³ knows that each bid has more than one best outcome. With uniform responses from each carrier, shippers can quickly rank results and create an unlimited quantity of what-if scenarios to make the optimal procurement decision.Jesse Burnett of Central Garden &amp; Pet experiences many of the same benefits. Founded in 1980, Central Garden &amp; Pet has spent the last three decades growing from a small garden supply company to a provider of a range of products from dog chews and bird seed to soil supplements and natural insecticides. For much of its life, the company shipped these disparate goods via LTL and truckload carriers to retailers throughout the country, relying on each business unit to negotiate directly with their freight transportation providers. This arrangement worked fairly well for a small company, but as Central Garden &amp; Pet expanded, leadership decided to consolidate decision making.Burnett helped centralize the transportation decision making in 2015 with SMC³’s Bid$ense. Before Bid$ense, every business unit operated independently as far as negotiating with carriers.“There were a lot of different things just floating around,” he said. “We didn’t have master agreements in place; no national pricing at all. The pricing from carriers was just all over the place, depending on where you were.”The transformations he saw with Bid$ense were immediate. Burnett has been using the tool about every other year since its implementation at the company. Central Garden and Pet’s $19.6 million 2019 LTL bid saved the company just more than 9 percent when compared to its historical average. For Burnett, though, bid automation extends far beyond savings.“We knew that we weren’t getting the best pricing offer from our carriers just because nothing was centralized,” he continued. “We knew that if we combined everything from all these business units and paired it with one corporate offering, then it would drive some cost benefit with it.”When the company initially decided to centralize bid procurement, executives researched a number of different methodologies and technologies. In the end, though, Burnett found that Bid$ense was both widespread and well known, and that his carrier partners already knew how to use the application. Burnett also highlighted the data-cleansing process as a major benefit, saying the rigorous process ensures that carriers always return the best price.“It definitely has helped drive savings,” he said. “Any time you go out there and you drive that competitiveness with the carriers and they know they’re in a bid environment, it seems to sharpen their pencils.”Transportation procurement is an integral part of the modern supply chain. With Bid$ense, shippers can develop a strategic implementation plan that saves them time and money, but also helps them create strong relationships with their carrier partners. These carriers appreciate the solution’s data-cleansing process; when carriers receive a complete shipment history and future volume forecast, they don’t have to guess on pricing. Carriers that receive more data from shippers get a complete picture of that shipper’s freight, allowing them to accurately plan instead of simply preparing for the worst-case scenario. Clean data presented through an automated system can lead to both bigger shipment savings and a lasting partnership between carrier and customer.Whether customers are looking to streamline over-the-road transportation bidding by automating the RFP process or create an entirely new, centralized sourcing process, Bid$ense has the analytical horsepower to get the job done.SMC³ 2020 Customer Case Study

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Shippers save money, time with automated transportation bidding tools

If there’s one immutable truth in the world of logistics, it’s this: LTL is an inherently complex form of transportation. Tariffs, rates, DIM weights, transit times — it’s enough to confuse even seasoned logistics professionals. The solution to this knowledge gap has historically been on-the-job training or university supply chain education, but for a variety of reasons there is now a pressing need for third-party, remote LTL training that prepares logistics workers for transportation success. Global Scope Can Overlook Local Intricacies In the past, professionals looking to move into a supply chain career learned about the basics of supply chain from universities. However, many of these college supply chain programs are now global in scope, focusing on worldwide supply chain management instead of the intricacies of specialized domestic transportation. And even these programs, which used to be widespread, are becoming less common. LTL is not an industry of broad-brush strokes; supply chain professionals really need a pointillistic understanding of the logistics of LTL in order to excel in the industry. Accelerating Need for Dedicated LTL Education This lack of specified training put the onus on employers to prepare new hires with the LTL knowledge needed to do their jobs. Dedicated LTL study is a necessity, not a luxury. At the same time, changes in LTL and the broader supply chain world are accelerating. The reliance on e-commerce has ballooned since the start of the pandemic, and last-mile LTL shipments and related e-commerce strains on the supply chain won’t diminish once social distancing abates. That genie isn’t going back into the bottle. So supply chain employers need logistics workers that are fully versed in all aspects of the industry, ready to solve unique shipping and delivery problems based on their extensive supply chain knowledge But why care about LTL? It’s been reported that some shippers in today’s world are no longer concerned with what mode is used to ship their goods. A Multimodal Approach Ensures On-Time Delivery This mode agnosticism means supply chain stakeholders have to be well versed in all modes of transportation. As unforeseen weather events and other disruptions, such as protests, become more common, savvy logistics employees will need to be armed with familiarity of all modes, not just the most popular, to ensure that freight is delivered on time, without damage, and in the most financially expedient way possible. Offerings like SMC³’s LTL online education courses cover a wide range of topics from LTL basics and operations to more advanced concepts like pricing analytics and transportation law. The company also has plans to continually refresh content, adding new expert presenters and taking the feedback of students to make the courses even better as time goes on. Learn more about&nbsp;<a href="https://logisticstrainingcenter.com/smc3-courses/" rel="noreferrer" class="joc_admin__link">SMC³’s LTL Online Education program</a>&nbsp;and view the 2021 hybrid schedule, featuring live industry experts,&nbsp;<a href="https://www.smc3.com/onlinelearning2021/" rel="noreferrer" class="joc_admin__link">here.</a>

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