<div class="phx-topic abstract-wrapper">In a bid to ease trade pressure from the United States, South Korean government agencies and governm</div>

In a bid to ease trade pressure from the United States, South Korean government agencies and governm

<div>In a bid to ease trade pressure from the United States, South Korean government agencies and government-invested companies will buy $2 billion worth of U.S. products, a newspaper reported today's edition.The Chosun Ilbo quoted an unidentified official at the Economic Planning Board as saying that the purchase will include supercomputers, special helicopters, and firefighting and construction equipment.The Seoul daily said the proposed purchases will be made under a program to reduce South Korea's trade surplus with the United States.Kim Mahn-Je, economic planning minister, recently said the government had begun taking steps to slow down the growth of its trade surplus...

In a bid to ease trade pressure from the United States, South Korean government agencies and government-invested companies will buy $2 billion worth of U.S. products, a newspaper reported today's edition. The Chosun Ilbo quoted an unidentified official at the Economic Planning Board as saying that the purchase will include supercomputers, special helicopters, and firefighting and construction equipment.The Seoul daily said the proposed purchases will be made under a program to reduce South Korea's trade surplus with the United States. Kim Mahn-Je, economic planning minister, recently said the government had begun taking steps to slow down the growth of its trade surplus to avert trade friction with other countries. Officials have reported that South Korea's trade surplus with the United States could climb to $10 billion this year, up sharply from last year's $7.3 billion, unless steps are taken to hold it down. The newspaper gave no time frame for the purchases, but it was believed the government would have to move soon in order to head off further trade pressure. Washington has been pressuring Seoul to open up its markets further and drastically raise the value of its won currency to help rectify the trade imbalance.

Maritime

S. KOREA TO BUY US GOODS

<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.

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<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 .

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 in the second quarter of $1.3 billion was an increase of 20%, driven by higher volume, higher tariffs and higher storage revenue. Earnings before interest, taxes, amortization and depreciation (EBITDA) rose 8% to $2.3 billion in Q2, while 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. H1 after tax net profit 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 minus 1% to 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 Q2 was 37% higher than at the end of Q1, 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 in the second quarter of $1.3 billion was an increase of 20%, driven by higher volume, higher tariffs and higher storage revenue. Earnings before interest, taxes, amortization and depreciation (EBITDA) rose 8% to $2.3 billion in Q2, while 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. H1 after tax net profit 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 minus 1% to 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 Q2 was 37% higher than at the end of Q1, 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.

Trucking News

Rail News

Truckload

North-American rail

Surface

Intermodal savings dipped in Q2; surcharges to factor into Q3 decisions

<div class="phx-topic abstract-wrapper">The reasons for the increase are largely tariff-related, sources say, as market participants adjust to the possibility of permanently higher tariff levels imposed by the Trump administration.</div>

The reasons for the increase are largely tariff-related, sources say, as market participants adjust to the possibility of permanently higher tariff levels imposed by the Trump administration.

<div class="phx-topic">Growing volumes of trans-Pacific eastbound spot cargo are being controlled at origin countries such as China as the impact of US tariffs bores deeply into shipping practices, sources tell the Journal of Commerce. The reasons for a noticeable increase in origin-controlled container trade are largely tariff-related, sources said, as parties to trade transactions adjust to possibly permanently higher tariff levels imposed by the Trump Administration. Origin-controlled cargo means the purchasing of ocean transportation is done by parties in exporting countries such as China, for example, rather than in the US. “At Toll Group, we are observing a slight upward trend in origin-controlled cargo,” said Marc Meier, Toll’s global head of ocean freight. “This trend appears to be influenced by factors such as the current supply and demand situation, where supply is notably higher than demand, as well as ongoing tariff discussions.” Meier said Toll’s origin-controlled cargo is now about 35% of its total cargo compared with 20% a few years ago. “We believe going forward, it might be 40-45%,” he said. Others see the trend also. “I have noticed a significant shift in the traditional mix of our smaller volume shippers where there is more Asia controlled/nominated shipments as a percent of our overall weekly bookings … this has been going on for the last five to six months,” said Kurt McElroy, executive vice president at the forwarder Kerry Apex. McElroy said the shift could be due to “smaller importers choosing to buy DDP [delivery duty paid] and leaving the duty uncertainty to the shipper.” “Volatile freight rates could also be a contributing factor in small importers’ decisions to have terms of sale [DDP or cost-insurance-freight], instead of typical [free-on-board] terms of sale,” he said. Under DDP terms, the seller bears all shipping and customs costs until it delivers the goods to the buyer, having cleared customs as the named place of destination. Another possible reason for growth in origin-controlled spot cargo is the growing ease of booking using online tools from carriers such as Maersk, Hapag Lloyd and CMA-CGM, who sources say are allocating greater amounts of their vessel space to online channels. McElroy said the volatile market could also be prompting large US retailers to seek DDP terms from their suppliers versus receiving such goods at origin and shipping them under their own contracts. “Big box retailers like Walmart, when ocean rates are not as volatile, will want to purchase FOB from their smaller suppliers and move under their own contract,” McElroy said. “Yet, when rates get volatile … on the upswing, and space tightens, along with duty uncertainty, Walmart will choose to have small suppliers ship to Walmart distribution centers CIF and not allow price increases. They have such leverage with smaller suppliers to accept these kind of terms.” <h3>Contract market shifting from US control? </h3> Few are seeing the contract market shift from US control, but some see it coming. “In the trans-Pacific trade, there has been a view that importers of goods into the USA were the major buyers of freight as they purchased goods from manufacturers in Asia FOB and controlled the import supply chain into the USA,” said Lian Hoon Lim, Singapore-based partner and managing director of Alix Partners, which has a long history in ocean freight. “So carriers naturally gave priority to marketing and selling freight to the ‘FOB buyer’ over the exporter in Asia who was labelled the ‘CIF buyer,’” he added. “Ten to 15 years ago that was very true for pretty much everything that came out of China, and that you could price up somewhat for FOB cargo vs. CIF.” But as Chinese companies emerge as sellers of goods under their own brand names, the ocean freight landscape will begin to change. “If you look at South Korea and Japan, as their exporting companies became big enough and more adventurous and spread their wings overseas, they established sales units in the US and Europe,” Lim said. “So instead of exporting their goods to third-party distributors, they sold to their own sales companies in the US and Europe. At that point the FOB vs. CIF issue becomes moot, because the control of the freight passes over to those companies and if their [headquarters] are in Japan or Korea or China, they are more likely to buy freight there versus at destination. “I can easily imagine that at some point in time, companies like Huawei saying we have a sales company in the US or Europe and that we should take control of long-distance shipments ourselves, and when that happens you can easily see the freight buying shifting from destination to origin,” Lim added. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Growing volumes of trans-Pacific eastbound spot cargo are being controlled at origin countries such as China as the impact of US tariffs bores deeply into shipping practices, sources tell the Journal of Commerce. The reasons for a noticeable increase in origin-controlled container trade are largely tariff-related, sources said, as parties to trade transactions adjust to possibly permanently higher tariff levels imposed by the Trump Administration. Origin-controlled cargo means the purchasing of ocean transportation is done by parties in exporting countries such as China, for example, rather than in the US. “At Toll Group, we are observing a slight upward trend in origin-controlled cargo,” said Marc Meier, Toll’s global head of ocean freight. “This trend appears to be influenced by factors such as the current supply and demand situation, where supply is notably higher than demand, as well as ongoing tariff discussions.” Meier said Toll’s origin-controlled cargo is now about 35% of its total cargo compared with 20% a few years ago. “We believe going forward, it might be 40-45%,” he said. Others see the trend also. “I have noticed a significant shift in the traditional mix of our smaller volume shippers where there is more Asia controlled/nominated shipments as a percent of our overall weekly bookings … this has been going on for the last five to six months,” said Kurt McElroy, executive vice president at the forwarder Kerry Apex. McElroy said the shift could be due to “smaller importers choosing to buy DDP [delivery duty paid] and leaving the duty uncertainty to the shipper.” “Volatile freight rates could also be a contributing factor in small importers’ decisions to have terms of sale [DDP or cost-insurance-freight], instead of typical [free-on-board] terms of sale,” he said. Under DDP terms, the seller bears all shipping and customs costs until it delivers the goods to the buyer, having cleared customs as the named place of destination. Another possible reason for growth in origin-controlled spot cargo is the growing ease of booking using online tools from carriers such as Maersk, Hapag Lloyd and CMA-CGM, who sources say are allocating greater amounts of their vessel space to online channels. McElroy said the volatile market could also be prompting large US retailers to seek DDP terms from their suppliers versus receiving such goods at origin and shipping them under their own contracts. “Big box retailers like Walmart, when ocean rates are not as volatile, will want to purchase FOB from their smaller suppliers and move under their own contract,” McElroy said. “Yet, when rates get volatile … on the upswing, and space tightens, along with duty uncertainty, Walmart will choose to have small suppliers ship to Walmart distribution centers CIF and not allow price increases. They have such leverage with smaller suppliers to accept these kind of terms.” Contract market shifting from US control? Few are seeing the contract market shift from US control, but some see it coming. “In the trans-Pacific trade, there has been a view that importers of goods into the USA were the major buyers of freight as they purchased goods from manufacturers in Asia FOB and controlled the import supply chain into the USA,” said Lian Hoon Lim, Singapore-based partner and managing director of Alix Partners, which has a long history in ocean freight. “So carriers naturally gave priority to marketing and selling freight to the ‘FOB buyer’ over the exporter in Asia who was labelled the ‘CIF buyer,’” he added. “Ten to 15 years ago that was very true for pretty much everything that came out of China, and that you could price up somewhat for FOB cargo vs. CIF.” But as Chinese companies emerge as sellers of goods under their own brand names, the ocean freight landscape will begin to change. “If you look at South Korea and Japan, as their exporting companies became big enough and more adventurous and spread their wings overseas, they established sales units in the US and Europe,” Lim said. “So instead of exporting their goods to third-party distributors, they sold to their own sales companies in the US and Europe. At that point the FOB vs. CIF issue becomes moot, because the control of the freight passes over to those companies and if their [headquarters] are in Japan or Korea or China, they are more likely to buy freight there versus at destination. “I can easily imagine that at some point in time, companies like Huawei saying we have a sales company in the US or Europe and that we should take control of long-distance shipments ourselves, and when that happens you can easily see the freight buying shifting from destination to origin,” Lim added. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Supply chain

Tariff realities prompt growth in ‘origin-controlled’ cargo on trans-Pacific

<div class="phx-topic abstract-wrapper">The National Motor Freight Traffic Association will oversee development of a truckload scheduling initiative among the Scheduling Standards Consortium’s 17 existing members.</div>

The National Motor Freight Traffic Association will oversee development of a truckload scheduling initiative among the Scheduling Standards Consortium’s 17 existing members.

<div class="phx-topic">The National Motor Freight Traffic Association (NMFTA) has taken over management of a consortium of freight brokers and technology providers developing standards for truckload appointment scheduling. NMFTA, which is most known for developing rate classification standards for the less-than-truckload (LTL) industry, also operates a Digital Standards Development Council for the trucking industry. Within the full truckload portion of that initiative it will assume management of the Scheduling Standards Consortium (SSC), a group started in 2022 by J.B. Hunt, Uber Freight and the now-defunct freight broker Convoy to build a <a href="https://www.joc.com/article/major-us-freight-brokers-unveil-appointment-scheduling-standards-5217739">common appointment scheduling protocol</a> for truckload freight. “This new development will support NMFTA’s efforts to create standards that improve communication between carriers, shippers, technology providers and third-party logistics providers [3PLs] by creating and sharing application programming interfaces [APIs] for a fully digital logistics process,” the group said in a statement Tuesday. SSC was attempting to create a uniform appointment system for carriers and receiving facilities as opposed to each broker having a different process, with the idea that no broker was able to sell its differentiation in the market. <a href="https://www.joc.com/article/truckload-appointment-standards-group-adds-heavyweights-to-drive-adoption-5192857">Membership grew in 2023</a> when the consortium added three brokers and four transportation management system (TMS) providers. Visibility software vendor FourKites then <a href="https://www.joc.com/article/fourkites-integrates-with-truckload-scheduling-standards-initiative-5219328">adopted the SSC standards in mid-2024</a>. The group now has 17 members — 11 brokers and six technology providers. “The current SSC members are enthusiastic about this strategy and champions of our effort to ensure digital standards are developed,” Debbie Sparks, NMFTA’s executive director, said in the statement. <h3>Tech options grow </h3>Outside of the issue of scheduling standards, a number of individual SSC members have undergone substantial changes. Founding member <a href="https://www.joc.com/article/convoy-says-will-shut-operations-sell-off-technology-amid-market-downturn-5215523">Convoy went out of business</a> in the fall of 2023. Broker Coyote Logistics, which joined in mid-2023, was <a href="https://www.joc.com/article/rxo-purchase-of-coyote-logistics-highlights-us-brokerage-market-pressures-5192296">sold by UPS to RXO</a> in June 2024. E2open, which also joined in mid-2023, was <a href="https://www.joc.com/article/wisetech-notches-biggest-acquisition-with-21-billion-deal-for-e2open-6011581">acquired in May by WiseTech Global</a>. And while the SSC has been trying to drive adoption of scheduling standards among members while recruiting new ones, the category of truckload scheduling software has expanded. Companies such as Qued and Bigger Picture have built tools specific to appointment scheduling, while others, such as Vooma, HappyRobot and Drumkit provide automation geared toward scheduling, among other workflows. “Given NMFTA’s expertise and history in standards development, it was an easy choice to seamlessly transition,” Stuart Scott, chairman of the Digital FTL Council and executive vice president and chief information officer for J.B. Hunt, said in the statement. “J.B. Hunt and several other SSC council members are joining the Digital FTL Council to further our partnership and bring more digital standards to the logistics industry.” Contact Eric Johnson at <a href="mailto:eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

The National Motor Freight Traffic Association (NMFTA) has taken over management of a consortium of freight brokers and technology providers developing standards for truckload appointment scheduling. NMFTA, which is most known for developing rate classification standards for the less-than-truckload (LTL) industry, also operates a Digital Standards Development Council for the trucking industry. Within the full truckload portion of that initiative it will assume management of the Scheduling Standards Consortium (SSC), a group started in 2022 by J.B. Hunt, Uber Freight and the now-defunct freight broker Convoy to build a common appointment scheduling protocol for truckload freight. “This new development will support NMFTA’s efforts to create standards that improve communication between carriers, shippers, technology providers and third-party logistics providers [3PLs] by creating and sharing application programming interfaces [APIs] for a fully digital logistics process,” the group said in a statement Tuesday. SSC was attempting to create a uniform appointment system for carriers and receiving facilities as opposed to each broker having a different process, with the idea that no broker was able to sell its differentiation in the market. Membership grew in 2023 when the consortium added three brokers and four transportation management system (TMS) providers. Visibility software vendor FourKites then adopted the SSC standards in mid-2024 . The group now has 17 members — 11 brokers and six technology providers. “The current SSC members are enthusiastic about this strategy and champions of our effort to ensure digital standards are developed,” Debbie Sparks, NMFTA’s executive director, said in the statement. Tech options grow Outside of the issue of scheduling standards, a number of individual SSC members have undergone substantial changes. Founding member Convoy went out of business in the fall of 2023. Broker Coyote Logistics, which joined in mid-2023, was sold by UPS to RXO in June 2024. E2open, which also joined in mid-2023, was acquired in May by WiseTech Global . And while the SSC has been trying to drive adoption of scheduling standards among members while recruiting new ones, the category of truckload scheduling software has expanded. Companies such as Qued and Bigger Picture have built tools specific to appointment scheduling, while others, such as Vooma, HappyRobot and Drumkit provide automation geared toward scheduling, among other workflows. “Given NMFTA’s expertise and history in standards development, it was an easy choice to seamlessly transition,” Stuart Scott, chairman of the Digital FTL Council and executive vice president and chief information officer for J.B. Hunt, said in the statement. “J.B. Hunt and several other SSC council members are joining the Digital FTL Council to further our partnership and bring more digital standards to the logistics industry.” Contact Eric Johnson at eric.johnson@spglobal.com .

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Trucking standards group takes control of truckload scheduling consortium

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