<div class="phx-topic abstract-wrapper">As far as Rep. Frank LoBiondo is concerned, this belongs in Ripley's. "It's really hard to believe,"</div>

As far as Rep. Frank LoBiondo is concerned, this belongs in Ripley's. "It's really hard to believe,"

<div>As far as Rep. Frank LoBiondo is concerned, this belongs in Ripley's. "It's really hard to believe," the New Jersey Republican said. "We passed a bill, had it signed into law, and they ignore it. They're really inept, or they don't care. They just don't seem to be fazed by this at all. They've run out of time, and they keep coming up with these lame excuses. If I could find a way to ratchet down on them, I'd do it in a heartbeat."LoBiondo's frustration is with the Transportation Worker Identification Credential program. Such a blast from a senior member...

As far as Rep. Frank LoBiondo is concerned, this belongs in Ripley's. "It's really hard to believe," the New Jersey Republican said. "We passed a bill, had it signed into law, and they ignore it. They're really inept, or they don't care. They just don't seem to be fazed by this at all. They've run out of time, and they keep coming up with these lame excuses. If I could find a way to ratchet down on them, I'd do it in a heartbeat." LoBiondo's frustration is with the Transportation Worker Identification Credential program. Such a blast from a senior member of Congress could be enough to make Transportation Security Administration employees duck and cover, but it's nothing new. TWIC has been a thorn in the side almost since Congress created it five years ago. At a House Transportation and Infrastructure Subcommittee on Coast Guard and Maritime hearing on July 12, the exasperation meter went up again. TSA managers announced that TWIC enrollment, originally planned to begin last spring, had been delayed to the fall. LoBiondo was among a chorus of committee members who told TSA and Coast Guard witnesses that they were fed up. Congress legislated the TWIC into being part of the Maritime Transportation Security Act, but the TWIC has sustained one setback after another. The SAFE Port Act last year was a sharp prod from Capitol Hill to get things moving. While the TSA has apparently made progress, the delays have cost the agency credibility points in Congress. However, Congress also has been part of the problem. Under the MTSA, the TWIC was to be up and running by the end of 2003. It's debatable whether the deadline was realistic, but TSA veterans would likely say that the TWIC was one project among many that they had to effect in too little time, with too little money. "It's easy to describe TWIC; it's very hard to deliver it," said Stephen McHale, former TSA deputy administrator, now a Washington attorney. The TSA was one of the first agencies born of the Sept. 11 terrorist attacks, and for the first 18 months, its top priority was clear: secure the aviation industry. The TSA was "the largest nationalization of a private-sector industry since Truman tried to deal with the steel industry. Even in the first year there wasn't much done on TWIC at all. We really started thinking seriously about it in 2003," McHale said. The TSA was late out of the gate, and then was tripped by another congressional roadblock. Rep. Hal Rogers, R-Ky., chairman of the Appropriations Subcommittee on Homeland Security, held up funding for the TWIC for two years to bully the Department of Homeland Security into locating the processing center for TWIC cards in his district. The TWIC also grew more complex as the legislation leading up to the MTSA worked its way through Congress. A House bill called on the TSA to create a program to check the background of port workers. The Senate bill called for workers to carry a security ID card. Neither ordered the TSA to create a card that would hold biometric data, but the requirement ended up in the bill that President Bush signed in November 2002. Carl Bentzel, a member of a Washington lobbying firm, was a senior staff member of the Senate Commerce Committee in 2002, and one of the authors of the MTSA. He said that putting biometric data on the card was an idea that came from the Bush administration, which was promoting biometrics as a federal standard. "There wasn't much concern about it at the time. It was, 'Hey, the federal standard is biometric. That's where the feds want to go, so why shouldn't we have it here?' " "The original idea of TWIC was that you get this card, it would be compatible with almost any kind of card reader, and that would leave it up to the private sector to upgrade their security to take advantage of the full amount of information that was on the TWIC," McHale said. After all, at some places, the "card reader" may be a guard at the gate. The TSA designed the security credential that Congress ordered, McHale said. "That's never stopped anybody from criticizing TSA. TSA gets hammered for stealing everybody's lighters at the (airport) checkpoint. Well, guess what? That's a statutory requirement. "TWIC should have been broken down into bite-size portions, and make progress in smaller areas, then expand it on an industry-by-industry basis," McHale said. "I think the overall goal of having this national interoperable card that could do everything was probably too much. It was an idea that came out in the aftermath of 9/11. There were a lot of proposals out there to do lots of things that hadn't been done before. This is really a very complicated program." Complicated enough that a minority of transportation committee members have begun to question whether the TWIC is worth it. Rep. Rick Larsen, D-Wash., said his patience with the TWIC, along with other DHS high-tech security programs, is wearing thin. "There are a number of programs that involve biometrics, that are supposed to make us safer, and they can't get anything right." Larsen said the Western Hemisphere Travel Initiative is another example of biometrics gone wrong. "They can't get that right, either. They're trying to do a passport or other secure document, and it's proving to be expensive and, to my mind, not worth the security benefit relative to what it's going to cost the taxpayer," he said. "Five years down the road, TWIC isn't implemented, and I'm not yet convinced that all the time and pain that TSA has put in, and all that cost is going to give us all that much security benefit," Larsen said. "Do we want to be sure that people who are tied to terrorism, or are a threat on our ships or docks never get there? Yes we do," Larsen said, but he doubts that issuing all workers a security credential will do the job. "The more we go down this road, the less security benefit I see, and the higher the cost that we pay." R.G. Edmonson can be contacted at bedmonson@joc.com . Readers of the digital edition of the JoC who want more information can click on: http://transportation.house.gov/hearings/ hearingdetail.aspx?NewsID=249 www.tsa.gov/what_we_do/layers/twic/index.shtm

Transport, Trade and Regulation News

TWIC: Easier legislated than done

<div class="phx-topic abstract-wrapper">The routing impasse between the railroads threatens supply chain disruptions for ocean carrier CMA CGM, which has cargo booked on the service that is due to begin later this week.</div>

The routing impasse between the railroads threatens supply chain disruptions for ocean carrier CMA CGM, which has cargo booked on the service that is due to begin later this week.

Feature image

<div class="phx-topic">BNSF Railway has filed an <a href="https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/1751927358207/309737.pdf">emergency petition</a> with the US Surface Transportation Board to intervene in a dispute with Union Pacific Railroad in which BNSF alleges UP is blocking the launch of a new freight service between the Port of Oakland and Salt Lake City. The impasse threatens supply chain disruptions for ocean carrier CMA CGM, which has cargo booked on the service that is due to begin later this week. The disagreement involves how BNSF will route trains between Oakland and Salt Lake City. BNSF wants to run a double-stack intermodal service along the so-called Northern Route, which passes through northern California and Nevada. UP said BNSF must instead use the Southern Route over Donner Pass near Lake Tahoe, where UP invested in costly tunnel upgrades more than a decade ago. The route selected has financial implications for both Class I railroads, including how many train crews are needed and whether BNSF would owe Union Pacific millions of dollars for using the upgraded Southern Route. BNSF has the right to use UP-owned tracks between Oakland and Salt Lake City. However, UP controls dispatching and provides train crews, and without its cooperation, BNSF cannot move containers across the corridor. The dispute, meanwhile, threatens the launch of an international intermodal service scheduled for later this week. CMA CGM called the matter “deeply concerning” and costly for cargo owners. “Without immediate resolution, our supply chain will be disrupted, impacting our customers across the region, including potentially a loss of business,” Bob Basila, senior vice president of CMA CGM, wrote in <a href="https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/1751927391221/309738.pdf">a filing to STB Monday</a>. “We have made substantial operational and commercial commitments based on the availability of this service, and the current impasse threatens to undermine those investments.” BNSF said emergency relief is necessary given freight has already arrived in Oakland. “The first empty train arrived in Salt Lake City [July 6] and the first container arrived [July 7],” BNSF wrote Monday in its petition to the STB. “Once loaded, the first westbound train is expected to leave Salt Lake City this week. BNSF anticipates the first eastbound movement of BNSF double-stack intermodal trains over the Northern Route will begin as early as later this week.” There is potential for business growth in Salt Lake City for ocean carriers. In 2020, ocean carriers handled nearly 52,000 TEUs between Oakland and Salt Lake City, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. The total, however, has fallen each subsequent year, ending last year at 16,600 TEUs. If ocean carriers were able to return to the 2020 total, it would be enough volume to support multiple trains per week in both directions, although it’s unlikely there would be daily trains. <h3>Allegations fly in both directions </h3>BNSF told the STB it would prefer to use the Northern Route and claimed UP is employing delay tactics in retaliation for BNSF signing multi-year agreements with two former UP ocean carrier partners, including CMA CGM. UP alleges that BNSF did not provide sufficient prior notice to hire crews and plan resources to handle up to five trains per week in both directions between Oakland and Salt Lake City and requires more time to prepare. Carl Garrison, UP’s vice president of network planning and operations, said BNSF only notified UP senior staff of its needs on June 20. BNSF countered that it contacted UP on May 2, including written correspondence and follow-up phone calls. “If BNSF cannot fulfill its promises to begin running new intermodal service this week, it has only itself to blame,” UP wrote in <a href="https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/1751971741044/309739.pdf">its response Monday</a> to the STB. UP also said trains on the Northern Route primarily run westbound, so running a bi-directional service would require significant operational adjustments and could degrade the performance of existing trains. It added that the Southern Route is best equipped to handle bi-directional traffic. The Southern Route was upgraded in 2009 to accommodate double-stack intermodal trains. If BNSF uses it, the company could be required to reimburse UP for up to half the cost of those improvements. BNSF argues doing so would cost tens of millions, making the new service financially unsustainable. BNSF would only need to pay for crew services, dispatching and track access on the Northern Route, a much lower figure. UP also said the matter should go through the normal STB dispute process, not an emergency filing. The normal dispute resolution process outlined in a 2002 agreement includes meetings, executive escalation, and potential arbitration or mediation, which can take far longer to resolve. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a> </div>

BNSF Railway has filed an emergency petition with the US Surface Transportation Board to intervene in a dispute with Union Pacific Railroad in which BNSF alleges UP is blocking the launch of a new freight service between the Port of Oakland and Salt Lake City. The impasse threatens supply chain disruptions for ocean carrier CMA CGM, which has cargo booked on the service that is due to begin later this week. The disagreement involves how BNSF will route trains between Oakland and Salt Lake City. BNSF wants to run a double-stack intermodal service along the so-called Northern Route, which passes through northern California and Nevada. UP said BNSF must instead use the Southern Route over Donner Pass near Lake Tahoe, where UP invested in costly tunnel upgrades more than a decade ago. The route selected has financial implications for both Class I railroads, including how many train crews are needed and whether BNSF would owe Union Pacific millions of dollars for using the upgraded Southern Route. BNSF has the right to use UP-owned tracks between Oakland and Salt Lake City. However, UP controls dispatching and provides train crews, and without its cooperation, BNSF cannot move containers across the corridor. The dispute, meanwhile, threatens the launch of an international intermodal service scheduled for later this week. CMA CGM called the matter “deeply concerning” and costly for cargo owners. “Without immediate resolution, our supply chain will be disrupted, impacting our customers across the region, including potentially a loss of business,” Bob Basila, senior vice president of CMA CGM, wrote in a filing to STB Monday . “We have made substantial operational and commercial commitments based on the availability of this service, and the current impasse threatens to undermine those investments.” BNSF said emergency relief is necessary given freight has already arrived in Oakland. “The first empty train arrived in Salt Lake City [July 6] and the first container arrived [July 7],” BNSF wrote Monday in its petition to the STB. “Once loaded, the first westbound train is expected to leave Salt Lake City this week. BNSF anticipates the first eastbound movement of BNSF double-stack intermodal trains over the Northern Route will begin as early as later this week.” There is potential for business growth in Salt Lake City for ocean carriers. In 2020, ocean carriers handled nearly 52,000 TEUs between Oakland and Salt Lake City, according to PIERS, a sister product of the Journal of Commerce within S&P Global. The total, however, has fallen each subsequent year, ending last year at 16,600 TEUs. If ocean carriers were able to return to the 2020 total, it would be enough volume to support multiple trains per week in both directions, although it’s unlikely there would be daily trains. Allegations fly in both directions BNSF told the STB it would prefer to use the Northern Route and claimed UP is employing delay tactics in retaliation for BNSF signing multi-year agreements with two former UP ocean carrier partners, including CMA CGM. UP alleges that BNSF did not provide sufficient prior notice to hire crews and plan resources to handle up to five trains per week in both directions between Oakland and Salt Lake City and requires more time to prepare. Carl Garrison, UP’s vice president of network planning and operations, said BNSF only notified UP senior staff of its needs on June 20. BNSF countered that it contacted UP on May 2, including written correspondence and follow-up phone calls. “If BNSF cannot fulfill its promises to begin running new intermodal service this week, it has only itself to blame,” UP wrote in its response Monday to the STB. UP also said trains on the Northern Route primarily run westbound, so running a bi-directional service would require significant operational adjustments and could degrade the performance of existing trains. It added that the Southern Route is best equipped to handle bi-directional traffic. The Southern Route was upgraded in 2009 to accommodate double-stack intermodal trains. If BNSF uses it, the company could be required to reimburse UP for up to half the cost of those improvements. BNSF argues doing so would cost tens of millions, making the new service financially unsustainable. BNSF would only need to pay for crew services, dispatching and track access on the Northern Route, a much lower figure. UP also said the matter should go through the normal STB dispute process, not an emergency filing. The normal dispute resolution process outlined in a 2002 agreement includes meetings, executive escalation, and potential arbitration or mediation, which can take far longer to resolve. Contact Ari Ashe at ari.ashe@spglobal.com

North American ports

Intermodal providers

BNSF-UP dispute threatens Oakland-SLC service, triggers STB petition

<div class="phx-topic abstract-wrapper">Beginning in September, the joint service will make added stops at Aarhus in Denmark, Gothenburg in Sweden and Rotterdam in the Netherlands as the last three European calls. </div>

Beginning in September, the joint service will make added stops at Aarhus in Denmark, Gothenburg in Sweden and Rotterdam in the Netherlands as the last three European calls.

<div class="phx-topic">The Gemini Cooperation is adding three new calls on a joint Asia-Europe container service as port congestion in Northern Europe challenges the hub-and-spoke model championed by the shipping alliance. Gemini partners Maersk and Hapag-Lloyd will change port rotations for their respective AE5 and NE4 services from Asia to “address fluctuating port congestion in Europe and ensure more consistent delivery,” Hapag-Lloyd said in an advisory Tuesday. The original European rotation of the AE5/NE4 only included London Gateway and Germany’s Bremerhaven and Hamburg ports. Along with those existing calls, the services from September will make added stops at Aarhus in Denmark, Gothenburg in Sweden and Rotterdam in the Netherlands as their last three European calls. Aarhus and Gothenburg had been previously served by Gemini using a shuttle service for transshipping from Bremerhaven. The changes announced Tuesday include the AE5/NE4 services calling Hamburg before Bremerhaven. While the Gemini partners have insisted their hub-and-spoke network could maintain reliable schedules and avoid blank sailings, Maersk said in a separate advisory Tuesday it was just as easy to unwind the network “to address challenges, predicted or not.” It added that the shuttle vessels serving Aarhus will be redeployed to “locations with an increased disruption risk to our customers’ business.” Since April, Europe has experienced bouts of port congestion because of strong import demand, changes in container alliance structures and poor schedule reliability due to the ongoing longer transits around southern Africa. Other ocean carriers have <a href="https://www.joc.com/article/ocean-carriers-adjust-calls-as-congestion-chokes-european-hubs-6037668">had to switch their European port rotations</a> to mitigate delays. <h3>Busy spring at Hamburg </h3>Hamburg, one of the harder-hit ports, saw an uptick in ship calls and vessel sizes through spring, according to data from Sea-web, a sister product of the Journal of Commerce within S&amp;P Global. During April, 416 container ships called the port, Sea-web data shows, with total vessel capacity reaching 1.83 million TEUs, the highest in 12 months. In May, 421 container ships called Hamburg, totaling 1.8 million TEUs in capacity. Germany’s HHLA, which operates three of Hamburg’s container terminals, is seeing ships wait between one and four days for an open berth as the “line-up is congested with late-arriving vessels,” ocean carrier HMM said in a customer advisory update. The terminals are operating at 75% to 80% capacity. Ongoing capital projects at Hamburg terminals may also be impacting handling efficiency. HHLA had to reduce the size of one berth at a Hamburg terminal due to construction of new ship-to-shore cranes. Another HHLA terminal is constructing two additional container yards this summer, which won’t be completed until next year. The terminal is also testing automated guide vehicles for moving containers. The tests are starting out on smaller ships, with a full rollout to all the berths in late 2025. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The Gemini Cooperation is adding three new calls on a joint Asia-Europe container service as port congestion in Northern Europe challenges the hub-and-spoke model championed by the shipping alliance. Gemini partners Maersk and Hapag-Lloyd will change port rotations for their respective AE5 and NE4 services from Asia to “address fluctuating port congestion in Europe and ensure more consistent delivery,” Hapag-Lloyd said in an advisory Tuesday. The original European rotation of the AE5/NE4 only included London Gateway and Germany’s Bremerhaven and Hamburg ports. Along with those existing calls, the services from September will make added stops at Aarhus in Denmark, Gothenburg in Sweden and Rotterdam in the Netherlands as their last three European calls. Aarhus and Gothenburg had been previously served by Gemini using a shuttle service for transshipping from Bremerhaven. The changes announced Tuesday include the AE5/NE4 services calling Hamburg before Bremerhaven. While the Gemini partners have insisted their hub-and-spoke network could maintain reliable schedules and avoid blank sailings, Maersk said in a separate advisory Tuesday it was just as easy to unwind the network “to address challenges, predicted or not.” It added that the shuttle vessels serving Aarhus will be redeployed to “locations with an increased disruption risk to our customers’ business.” Since April, Europe has experienced bouts of port congestion because of strong import demand, changes in container alliance structures and poor schedule reliability due to the ongoing longer transits around southern Africa. Other ocean carriers have had to switch their European port rotations to mitigate delays. Busy spring at Hamburg Hamburg, one of the harder-hit ports, saw an uptick in ship calls and vessel sizes through spring, according to data from Sea-web, a sister product of the Journal of Commerce within S&P Global. During April, 416 container ships called the port, Sea-web data shows, with total vessel capacity reaching 1.83 million TEUs, the highest in 12 months. In May, 421 container ships called Hamburg, totaling 1.8 million TEUs in capacity. Germany’s HHLA, which operates three of Hamburg’s container terminals, is seeing ships wait between one and four days for an open berth as the “line-up is congested with late-arriving vessels,” ocean carrier HMM said in a customer advisory update. The terminals are operating at 75% to 80% capacity. Ongoing capital projects at Hamburg terminals may also be impacting handling efficiency. HHLA had to reduce the size of one berth at a Hamburg terminal due to construction of new ship-to-shore cranes. Another HHLA terminal is constructing two additional container yards this summer, which won’t be completed until next year. The terminal is also testing automated guide vehicles for moving containers. The tests are starting out on smaller ships, with a full rollout to all the berths in late 2025. Contact Michael Angell at michael.angell@spglobal.com .

Maritime

Container Shipping News

Port News

Asia-Europe

International ports

Container lines

Europe’s port congestion forcing Gemini to switch up Asia service

<div class="phx-topic abstract-wrapper">The recent death of FedEx founder Fred Smith presents an opportunity to compare his contributions to global supply chains with another visionary, Malcom McLean, the father of containerization. </div>

The recent death of FedEx founder Fred Smith presents an opportunity to compare his contributions to global supply chains with another visionary, Malcom McLean, the father of containerization.

<div class="phx-topic">It is hard to imagine two individuals who did more to disrupt freight transportation than Fred Smith and Malcom McLean. But that is where the similarities end between the pioneers of express delivery and container shipping. Their respective revolutions redefined transportation but resulted in a wholly divergent set of winners and losers. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6040127_0.1.jpg"></img></div>McLean, who died in 2001, was a trucker frustrated by having to wait at the port while cargo was manually loaded. His genius, and why he sits in the pantheon of 20th century business visionaries, was not because he “invented” the shipping container. The container had been identified years before his first ship sailed in 1956 as a method capable of driving out cost, enabling end-to-end transit and reducing theft. Rather, his legacy emerged through the grit and determination required to break through walls of operational complexity and customer skepticism. Smith, <a href="https://www.joc.com/article/fred-smith-fedex-founder-and-visionary-dead-at-80-6029098">who died June 21 at the age of 80</a>, also broke little ground technologically — planes, trucks and warehouses all existed long before FedEx began operations in 1973. Rather, it was physically combining the assets and synching them operationally that created the breakthrough represented by overnight express delivery. What Smith saw, as did McLean, was an untapped market. While McLean saw customers hungry to drive down costs and willing to sacrifice delivery speed to achieve it, Smith spotted a market at the opposite end of the spectrum — one that wanted speed and, at the right price, would be willing to pay for it. The results of their divergent trajectories up and down the value chain could not have been more different. Smith created value — shipping blood samples, legal documents and urgently needed spare parts — and was compensated for doing so. Smith’s model, envisioned in a 1965 paper written at Yale, was validated; FedEx today has half a million employees, a market cap of $55 billion and has expanded into adjacent spaces such as freight forwarding and trucking. Express delivery, moreover, has been proven to be a profitable business for FedEx and others that followed, including UPS and DHL. FedEx is a case study in business benefit. Customers benefit through availability of a needed service and the provider is duly compensated, so everyone wins. Not so in container shipping. <h3>‘Lopsided’ value proposition </h3>The revolution sparked by McLean’s debut of the first container service, operating between Newark and Houston, led instead to a lopsided value proposition. While McLean himself made a fortune when he sold his shipping company, Sea-Land Service Inc. in 1969, the long-term winners in containerization of ocean-going cargo, was not among the shipping companies that followed McLean into containers, but rather their customers, and developing nations such as China. Containers enhanced the opportunity presented by low-cost labor in China with low-cost and efficient shipping, greasing the wheels for mass-relocation of manufacturing beginning in the 1990s. But the shipping companies themselves, moving containers on ever-larger ships, struggled over a span of decades to avoid waves of overcapacity and low freight rates — to the benefit of customers who were more than happy with low costs and largely reliable schedules. The industry earned more profit from 2020 to 2022 during the extreme COVID-19 supply chain disruptions than it did during the entire period between 1956 and 2020, according to data from Sea-Intelligence Maritime Analysis. And even then, the lopsided value proposition of containers only flipped from one winner to another; ocean carriers’ profits during COVID-19 came at the expense of their customers who suddenly had to endure higher costs, longer delays and inconsistent service. The reliable supply chains on which their international expansion had been based were in tatters. And since COVID-19, the situation for retailers, manufacturers and other users of containerized shipping has only continued. Successive waves of disruption, including the diversion of ships around southern Africa to avoid attacks in the Red Sea, drought in the Panama Canal and upheaval due to the imposition and then retraction of 145% tariffs on China led to even more profits for carriers and yet more problems for supply chains. Anger at ocean carriers led in 2022 to the passage of the first US ocean shipping legislation in nearly 25 years. None of this takes away from McLean’s accomplishment; his refusal to patent his innovation led to the 40-foot container becoming a global standard. But as a lesson in value creation, McLean and Smith offer two very different models. Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

It is hard to imagine two individuals who did more to disrupt freight transportation than Fred Smith and Malcom McLean. But that is where the similarities end between the pioneers of express delivery and container shipping. Their respective revolutions redefined transportation but resulted in a wholly divergent set of winners and losers. McLean, who died in 2001, was a trucker frustrated by having to wait at the port while cargo was manually loaded. His genius, and why he sits in the pantheon of 20th century business visionaries, was not because he “invented” the shipping container. The container had been identified years before his first ship sailed in 1956 as a method capable of driving out cost, enabling end-to-end transit and reducing theft. Rather, his legacy emerged through the grit and determination required to break through walls of operational complexity and customer skepticism. Smith, who died June 21 at the age of 80 , also broke little ground technologically — planes, trucks and warehouses all existed long before FedEx began operations in 1973. Rather, it was physically combining the assets and synching them operationally that created the breakthrough represented by overnight express delivery. What Smith saw, as did McLean, was an untapped market. While McLean saw customers hungry to drive down costs and willing to sacrifice delivery speed to achieve it, Smith spotted a market at the opposite end of the spectrum — one that wanted speed and, at the right price, would be willing to pay for it. The results of their divergent trajectories up and down the value chain could not have been more different. Smith created value — shipping blood samples, legal documents and urgently needed spare parts — and was compensated for doing so. Smith’s model, envisioned in a 1965 paper written at Yale, was validated; FedEx today has half a million employees, a market cap of $55 billion and has expanded into adjacent spaces such as freight forwarding and trucking. Express delivery, moreover, has been proven to be a profitable business for FedEx and others that followed, including UPS and DHL. FedEx is a case study in business benefit. Customers benefit through availability of a needed service and the provider is duly compensated, so everyone wins. Not so in container shipping. ‘Lopsided’ value proposition The revolution sparked by McLean’s debut of the first container service, operating between Newark and Houston, led instead to a lopsided value proposition. While McLean himself made a fortune when he sold his shipping company, Sea-Land Service Inc. in 1969, the long-term winners in containerization of ocean-going cargo, was not among the shipping companies that followed McLean into containers, but rather their customers, and developing nations such as China. Containers enhanced the opportunity presented by low-cost labor in China with low-cost and efficient shipping, greasing the wheels for mass-relocation of manufacturing beginning in the 1990s. But the shipping companies themselves, moving containers on ever-larger ships, struggled over a span of decades to avoid waves of overcapacity and low freight rates — to the benefit of customers who were more than happy with low costs and largely reliable schedules. The industry earned more profit from 2020 to 2022 during the extreme COVID-19 supply chain disruptions than it did during the entire period between 1956 and 2020, according to data from Sea-Intelligence Maritime Analysis. And even then, the lopsided value proposition of containers only flipped from one winner to another; ocean carriers’ profits during COVID-19 came at the expense of their customers who suddenly had to endure higher costs, longer delays and inconsistent service. The reliable supply chains on which their international expansion had been based were in tatters. And since COVID-19, the situation for retailers, manufacturers and other users of containerized shipping has only continued. Successive waves of disruption, including the diversion of ships around southern Africa to avoid attacks in the Red Sea, drought in the Panama Canal and upheaval due to the imposition and then retraction of 145% tariffs on China led to even more profits for carriers and yet more problems for supply chains. Anger at ocean carriers led in 2022 to the passage of the first US ocean shipping legislation in nearly 25 years. None of this takes away from McLean’s accomplishment; his refusal to patent his innovation led to the 40-foot container becoming a global standard. But as a lesson in value creation, McLean and Smith offer two very different models. Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Supply chain

Two legends took divergent paths to supply chain success

<div class="phx-topic abstract-wrapper">Rhenus Logistics will manage the end-to-end supply chain via a 4PL control tower tailored to the circular textile logistics business.</div>

Rhenus Logistics will manage the end-to-end supply chain via a 4PL control tower tailored to the circular textile logistics business.

<div class="phx-topic">Global clothing retailer H&amp;M Group and German recycling firm Remondis have formed a joint venture company that will tackle the logistics of reusing and recycling up to 150 million garments a year. Looper Textile Co. will collect, sort and enable the processing of used textiles, with German-based forwarder Rhenus Logistics coordinating the transport flows, end-to-end supply chain visibility and creation of a digital 4PL control tower tailored to the circular textile logistics business. “Used textiles are one of the largest material flows in the world,” Simon Bodmer, head of logistics at Remondis Recycling, said in a statement Tuesday announcing the joint venture. He added that digital solutions were crucial for the coordination and movement of the 150 million pieces of clothing to be collected per year. Rhenus will have the overarching responsibility for managing logistics partners and processes within the reuse and recycling system that supports the circular economy and requires full transparency, visibility and data-driven supply chain operations. “Our 4PL control tower provides a central platform for the coordinated and integrated management of all logistics activities and increases visibility along the entire value chain,” said Chris Gerfertz, managing global director at Rhenus 4PL Solutions. The impact of the textile industry on the environment is enormous. Textiles contain many different fibers that make recycling difficult and often impossible when the material consists of blended fibers. The United Nations Environment Program (UNEP) estimates 92 million metric tons of textile waste is produced globally each year. “Unsustainable fashion is aggravating the triple planetary crisis of climate change, nature, land and biodiversity loss, and pollution and waste,” Inger Andersen, executive director of UNEP, said in a speech earlier this year. “We need to focus on a circular economy approach that values sustainable production, reuse and repair.” EU rules requiring separate collection of textile waste came into force on Jan. 1, while proposals before the European Parliament include a requirement that producers of textiles products on the European single market should cover the costs of separate collection, sorting and recycling. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Global clothing retailer H&M Group and German recycling firm Remondis have formed a joint venture company that will tackle the logistics of reusing and recycling up to 150 million garments a year. Looper Textile Co. will collect, sort and enable the processing of used textiles, with German-based forwarder Rhenus Logistics coordinating the transport flows, end-to-end supply chain visibility and creation of a digital 4PL control tower tailored to the circular textile logistics business. “Used textiles are one of the largest material flows in the world,” Simon Bodmer, head of logistics at Remondis Recycling, said in a statement Tuesday announcing the joint venture. He added that digital solutions were crucial for the coordination and movement of the 150 million pieces of clothing to be collected per year. Rhenus will have the overarching responsibility for managing logistics partners and processes within the reuse and recycling system that supports the circular economy and requires full transparency, visibility and data-driven supply chain operations. “Our 4PL control tower provides a central platform for the coordinated and integrated management of all logistics activities and increases visibility along the entire value chain,” said Chris Gerfertz, managing global director at Rhenus 4PL Solutions. The impact of the textile industry on the environment is enormous. Textiles contain many different fibers that make recycling difficult and often impossible when the material consists of blended fibers. The United Nations Environment Program (UNEP) estimates 92 million metric tons of textile waste is produced globally each year. “Unsustainable fashion is aggravating the triple planetary crisis of climate change, nature, land and biodiversity loss, and pollution and waste,” Inger Andersen, executive director of UNEP, said in a speech earlier this year. “We need to focus on a circular economy approach that values sustainable production, reuse and repair.” EU rules requiring separate collection of textile waste came into force on Jan. 1, while proposals before the European Parliament include a requirement that producers of textiles products on the European single market should cover the costs of separate collection, sorting and recycling. Contact Greg Knowler at greg.knowler@spglobal.com .

Fast fashion retailer forms recycling logistics venture to tackle textile waste

<div class="phx-topic abstract-wrapper">The just-concluded legislative session also puts aside emergency funding for the Port of Portland that is generated via lottery sales.</div>

The just-concluded legislative session also puts aside emergency funding for the Port of Portland that is generated via lottery sales.

<div class="phx-topic">Oregon’s lawmakers voted to help finance dredging for the development of a new container terminal at the Port of Coos Bay — but only if more federal backing is secured. Legislators also set aside emergency funding that the Port of Portland sought to stave off its closure.The Oregon Legislature’s 2025 session, which ended in late June, included passage of a two-year spending bill that will allow the state to issue up to $100 million in bonds to fund channel deepening and widening for <a href="https://www.joc.com/article/proposed-oregon-container-terminal-among-projects-winning-dot-grants-5764924">the proposed Pacific Coast Intermodal Port (PCIP)</a> container terminal at Coos Bay. The spending bill now awaits Governor Tina Kotek’s signature. The terminal, a joint project of the port and logistics infrastructure developer NorthPoint Development, is designed to handle over 1 million TEUs per year, chiefly serving inland rail markets. The project calls for dredging eight miles of the Coos Bay navigation channel to 45 feet from its current depth of 37 feet, along with widening it from 300 feet to 450 feet. That will allow the PCIP to handle post-Panamax ships up to 13,000 TEUs. The Port of Coos Bay has targeted a 2030 opening for the project. The channel modifications are expected to cost a total of $560 million, according to the Port of Coos Bay. The state can only issue the bonds once the PCIP has received final permitting approval, and the project’s backers have secured $1 billion in railroad improvement financing from the Department of Transportation. The PCIP will require raising tunnel clearances and other improvements on about 120 miles of track that will connect the port to Union Pacific’s rail network. Coos Bay has secured $30 million in various grants toward improving the rail tracks. In addition, <a href="https://www.joc.com/article/proposed-oregon-container-terminal-among-projects-winning-dot-grants-5764924">Coos Bay also received a $25 million grant</a> in 2024 toward the design of the PCIP, which is expected to cost over $2 billion. <h3>Lottery to help fund Portland </h3>A separate bill passed at the end of the 2025 session includes a “Container Port Improvement Fund” that will include $20 million funded through lottery ticket sales. Gov. Kotek had sought <a href="https://www.joc.com/article/oregon-governor-proposes-40-million-to-keep-portland-container-service-alive-5225215">$40 million for the Port of Portland</a> last year after it revealed larger-than-expected financial losses, prompting the port to consider closing its container terminal. The port struck a deal in December for its current stevedore to fully takeover the terminal, a requirement for receiving the grant funding. The bill also sets aside $15 million in state funds for navigation improvements on the Columbia River. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>.</div>

Oregon’s lawmakers voted to help finance dredging for the development of a new container terminal at the Port of Coos Bay — but only if more federal backing is secured. Legislators also set aside emergency funding that the Port of Portland sought to stave off its closure. The Oregon Legislature’s 2025 session, which ended in late June, included passage of a two-year spending bill that will allow the state to issue up to $100 million in bonds to fund channel deepening and widening for the proposed Pacific Coast Intermodal Port (PCIP) container terminal at Coos Bay. The spending bill now awaits Governor Tina Kotek’s signature. The terminal, a joint project of the port and logistics infrastructure developer NorthPoint Development, is designed to handle over 1 million TEUs per year, chiefly serving inland rail markets. The project calls for dredging eight miles of the Coos Bay navigation channel to 45 feet from its current depth of 37 feet, along with widening it from 300 feet to 450 feet. That will allow the PCIP to handle post-Panamax ships up to 13,000 TEUs. The Port of Coos Bay has targeted a 2030 opening for the project. The channel modifications are expected to cost a total of $560 million, according to the Port of Coos Bay. The state can only issue the bonds once the PCIP has received final permitting approval, and the project’s backers have secured $1 billion in railroad improvement financing from the Department of Transportation. The PCIP will require raising tunnel clearances and other improvements on about 120 miles of track that will connect the port to Union Pacific’s rail network. Coos Bay has secured $30 million in various grants toward improving the rail tracks. In addition, Coos Bay also received a $25 million grant in 2024 toward the design of the PCIP, which is expected to cost over $2 billion. Lottery to help fund Portland A separate bill passed at the end of the 2025 session includes a “Container Port Improvement Fund” that will include $20 million funded through lottery ticket sales. Gov. Kotek had sought $40 million for the Port of Portland last year after it revealed larger-than-expected financial losses, prompting the port to consider closing its container terminal. The port struck a deal in December for its current stevedore to fully takeover the terminal, a requirement for receiving the grant funding. The bill also sets aside $15 million in state funds for navigation improvements on the Columbia River. Contact Michael Angell at michael.angell@spglobal.com .

Marine terminals

Oregon earmarks funds for proposed Coos Bay terminal

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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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