<div class="phx-topic abstract-wrapper">It is well documented that U.S. West Coast ports face a number of competitive challenges.</div>

It is well documented that U.S. West Coast ports face a number of competitive challenges.

<div>It is well documented that U.S. West Coast ports face a number of competitive challenges. Some of these challenges involve canals, both near and far, old and improved; terminal development throughout North America; challenging and costly environmental regulations; lengthy and often agonizing permitting processes; and aggressive marketing by East and Gulf coast states and ports.Despite these challenges, there is much reason for optimism. West Coast ports are evolving. New port commissioners were elected in Seattle last year and have interjected a new energy and focus for both the port and the region. The Port of Seattle is also beginning the...

It is well documented that U.S. West Coast ports face a number of competitive challenges. Some of these challenges involve canals, both near and far, old and improved; terminal development throughout North America; challenging and costly environmental regulations; lengthy and often agonizing permitting processes; and aggressive marketing by East and Gulf coast states and ports. Despite these challenges, there is much reason for optimism. West Coast ports are evolving. New port commissioners were elected in Seattle last year and have interjected a new energy and focus for both the port and the region. The Port of Seattle is also beginning the process of finding a new chief executive officer, leading the port into another chapter. Coupled with these changes, Seattle and the Port of Tacoma, which is blessed with a solid management team and commission, have filed an agreement with the Federal Maritime Commission (FMC) and are in discussions that may yield another evolutionary step in how both ports jointly address growing competitive threats. The Port of Oakland Harbor Commission is focused on the port’s core business activities, as demonstrated with the hiring of highly respected Chris Lytle last year as their new executive director and the recent hire of industry leader John Driscoll as maritime director. Last year’s election of Eric Garcetti as mayor of Los Angeles and the election this past week of Robert Garcia as mayor of Long Beach are bringing change at each port. The Port of Los Angeles just announced the widely praised appointment of APL’s Gene Seroka as the new executive director of the port, with the expectation that there will be an announcement from Long Beach coming soon. Both ports have also seen new appointments in their respective commissions, bringing a new attitude at each port. With these changes, coupled with talented staff at each of these ports, West Coast ports are well positioned to convert challenges into opportunities. John McLaurin is president of the Pacific Merchant Shipping Association . Contact him at jmclaurin@pmsaship.com .

North American ports

US West Coast ports: The benefits of change

<div class="phx-topic abstract-wrapper">It’s reasonable to assume the larger container carriers are now going to earn above historical returns, but they will not be immune from significant dips when supply significantly exceeds demand, writes Jeremy Masters.</div>

It’s reasonable to assume the larger container carriers are now going to earn above historical returns, but they will not be immune from significant dips when supply significantly exceeds demand, writes Jeremy Masters.

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<div class="phx-topic">For the early decades of container shipping, it was almost inconceivable that carriers could deliver a consistently good return on capital. Today we see several carriers making profits that are the envy of other industries, and as recently reported by Alphaliner, six publicly listed container carriers have a market valuation over $10 billion. Has the industry matured to the point where carriers can expect good returns to be the norm? <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6025533_0.1.jpg"></img></div>The answer is a qualified one. The major carriers are in a much stronger position to control the supply lever than they were <a href="https://www.joc.com/article/current-market-allows-top-ocean-carriers-to-strengthen-long-term-position-6016964">because of consolidation in the industry and reduction in the non-operating fleet</a>. The increase in vertical integration – which will take a dramatic step forward if the <a href="https://www.joc.com/article/panama-canal-mulls-developing-corozal-to-allay-neutrality-fears-over-hutchison-deal-6023330">acquisition of Hutchison Ports Holdings by Mediterranean Shipping Co.’s terminals subsidiary proceeds</a> – means that the big carriers are increasingly controlling an integral part of their product as well as its cost. The purchase of large amounts of new and secondhand tonnage in smaller sizes means that these carriers can also run their own regional and feeder systems off these acquired terminals – again controlling quality and cost. This becomes a powerful combination to compete against, and if a carrier outside the big league or a new entry wanted to emulate this set-up, the investment would be very large. That means there are some real barriers to entry. The position is different for operators in selected deep-sea trades, regional carriers and feeder specialists. These carriers can’t contend with volatile individual trades, have less control of supply and don’t have the resources available to ride out extended storms without withdrawing, or worse. They also have less control of their overall product because they don’t have the means to integrate vertically. Those who are agile and find the right niches can make a good return, but the stronger the big guys get, the more they can marginalize smaller operators or simply acquire them. We have a broadly two-tier industry then – the truly global carriers (and within them the bigger ones pursuing vertical integration who are getting stronger) -- and the rest. And the punching power is widening. The picture is reasonably rosy for the big carriers, but they do not have it entirely their own way: <h3>Control of supply, not demand </h3>Trade growth does not follow the clear patterns seen in early containerization, and geopolitics makes it increasingly unpredictable. There are good reasons to believe that global demand for container space will stay up – even if there is a redistribution – but carriers cannot rely on robust trade growth. Newbuild orders in recent years have considerably exceeded anything that could be expected on the demand side, and at some point the gap between supply and demand will be unbridgeable with major downward pressure on rates. <h3>High profits are an attraction </h3>Up until comparatively recently, many potential investors and operators in other transport modes could have looked at the containerized shipping industry as a bit of a basket case. As the fundamentals change in favor of the carriers, players with deep pockets may take another look. Purchase and upscaling of an existing player becomes possible. <h3>New business model </h3>Carriers have innovated considerably with physical products, but have been rather conservative about adopting new ways to market their products. This could become a backdoor way for a smaller carrier to emerge into the big league or a company using a different model in another mode to make a significant entry. <h3>Environmental factors </h3>Carriers can be commended for making some tough decisions to invest in more environmentally friendly tonnage when the ultimate winners in the alternative fuels race are unclear. This could be quite damaging for those who have made less-than-optimal picks, or beneficial for a later entrant. Meanwhile, the purchase of considerable amounts of old secondhand tonnage may become a dubious investment for some carriers if environmental regulations and fees tighten further. There are clearly other factors, such as how individual companies are run, that could enter the picture. But the above are tangible threats that are difficult for carriers to quantify and even harder to control. Looking at the whole picture, it’s reasonable to assume that the bigger container carriers are now going to earn above historical returns, but they will not be immune from significant dips when supply significantly exceeds demand. By virtue of their own recent success, they will also be facing fresh interest from aspirants within and outside the industry harboring ambitions to be at the top table – potentially touting a different business model. Perhaps not a golden age yet, but certainly an emergence from the dark ages. Contact Jeremy Masters at <a href="https://www.joc.com/article/jeremy@shippingmastershk.com">jeremy@shippingmastershk.com.</a></div>

For the early decades of container shipping, it was almost inconceivable that carriers could deliver a consistently good return on capital. Today we see several carriers making profits that are the envy of other industries, and as recently reported by Alphaliner, six publicly listed container carriers have a market valuation over $10 billion. Has the industry matured to the point where carriers can expect good returns to be the norm? The answer is a qualified one. The major carriers are in a much stronger position to control the supply lever than they were because of consolidation in the industry and reduction in the non-operating fleet . The increase in vertical integration – which will take a dramatic step forward if the acquisition of Hutchison Ports Holdings by Mediterranean Shipping Co.’s terminals subsidiary proceeds – means that the big carriers are increasingly controlling an integral part of their product as well as its cost. The purchase of large amounts of new and secondhand tonnage in smaller sizes means that these carriers can also run their own regional and feeder systems off these acquired terminals – again controlling quality and cost. This becomes a powerful combination to compete against, and if a carrier outside the big league or a new entry wanted to emulate this set-up, the investment would be very large. That means there are some real barriers to entry. The position is different for operators in selected deep-sea trades, regional carriers and feeder specialists. These carriers can’t contend with volatile individual trades, have less control of supply and don’t have the resources available to ride out extended storms without withdrawing, or worse. They also have less control of their overall product because they don’t have the means to integrate vertically. Those who are agile and find the right niches can make a good return, but the stronger the big guys get, the more they can marginalize smaller operators or simply acquire them. We have a broadly two-tier industry then – the truly global carriers (and within them the bigger ones pursuing vertical integration who are getting stronger) -- and the rest. And the punching power is widening. The picture is reasonably rosy for the big carriers, but they do not have it entirely their own way: Control of supply, not demand Trade growth does not follow the clear patterns seen in early containerization, and geopolitics makes it increasingly unpredictable. There are good reasons to believe that global demand for container space will stay up – even if there is a redistribution – but carriers cannot rely on robust trade growth. Newbuild orders in recent years have considerably exceeded anything that could be expected on the demand side, and at some point the gap between supply and demand will be unbridgeable with major downward pressure on rates. High profits are an attraction Up until comparatively recently, many potential investors and operators in other transport modes could have looked at the containerized shipping industry as a bit of a basket case. As the fundamentals change in favor of the carriers, players with deep pockets may take another look. Purchase and upscaling of an existing player becomes possible. New business model Carriers have innovated considerably with physical products, but have been rather conservative about adopting new ways to market their products. This could become a backdoor way for a smaller carrier to emerge into the big league or a company using a different model in another mode to make a significant entry. Environmental factors Carriers can be commended for making some tough decisions to invest in more environmentally friendly tonnage when the ultimate winners in the alternative fuels race are unclear. This could be quite damaging for those who have made less-than-optimal picks, or beneficial for a later entrant. Meanwhile, the purchase of considerable amounts of old secondhand tonnage may become a dubious investment for some carriers if environmental regulations and fees tighten further. There are clearly other factors, such as how individual companies are run, that could enter the picture. But the above are tangible threats that are difficult for carriers to quantify and even harder to control. Looking at the whole picture, it’s reasonable to assume that the bigger container carriers are now going to earn above historical returns, but they will not be immune from significant dips when supply significantly exceeds demand. By virtue of their own recent success, they will also be facing fresh interest from aspirants within and outside the industry harboring ambitions to be at the top table – potentially touting a different business model. Perhaps not a golden age yet, but certainly an emergence from the dark ages. Contact Jeremy Masters at jeremy@shippingmastershk.com.

Container lines

Maritime

Are we entering a ‘golden age’ for major ocean carriers?

<div class="phx-topic abstract-wrapper">While just 2% to 3% of global container traffic transits the key chokepoint, any restrictions would further tie up global vessel capacity and cut off the ports of Jebel Ali and Abu Dhabi. </div>

While just 2% to 3% of global container traffic transits the key chokepoint, any restrictions would further tie up global vessel capacity and cut off the ports of Jebel Ali and Abu Dhabi.

<div class="phx-topic">The Iranian government’s threat to close the Strait of Hormuz amid Israel’s attack on the country would tie up already stretched global container capacity, cut off Jebel Ali and Abu Dhabi ports and put upward pressure on bunker fuel costs. Just 2% to 3% of global container traffic moves through the vital chokepoint for crude oil transport, according to data from Container Trade Statistics (CTS). Nonetheless, a restriction on container traffic through the strait, making deployed tonnage ineffective, would put upward pressure on freight rates and extend transit times. Sea-Intelligence Maritime Analysis warned of major problems for container shipping should the strait be closed. “At the time of writing this, the two countries are exchanging continuous barrages of missiles and drones,” Sea-Intelligence CEO Alan Murphy wrote in the Sunday Spotlight newsletter. “For now, this has not led to any impact on commercial shipping in the Strait of Hormuz, and we should hope this to not become the case. If that happens, it will have a significant impact on container shipping flows to the major transshipment hubs in the region.” Dubai’s Jebel Ali was the 10th largest global container port as measured by volume in 2024, according to Alphaliner, while Khalifa is Abu Dhabi’s flagship container port. The container shipping market had already been stretched due to hostilities in the region, with container lines diverting away from the Gulf of Aden and Red Sea since late 2023 because of attacks from Houthi militants operating in Yemen. Most recently, carriers have repositioned capacity back to the trans-Pacific to handle rebounding Asia import volumes amid a pause in US tariffs. The idling of the global fleet is under 1% and the charter market for container ships remains elevated, according to analyst Alphaliner, reflecting stretched container capacity from not just Red Sea diversions, but port congestion in Europe, and, to a lesser degree, in Asia. According to Platts, a sister company of the Journal of Commerce within S&amp;P Global, more than 17 million barrels of crude oil each day move through the Strait of Hormuz, coming not just from Iran, but from Saudi Arabia, Kuwait, the UAE and Qatar. That is more than 20% of daily global crude production. “If the Strait of Hormuz was to close, in the midterm it would be disruptive to the oil and bunker industry if they’re not able to get crude product transported out of the Persian Gulf, which is going to lead to a price disruption,” said Michael Aldwell, Kuehne +Nagel’s executive vice president of sea logistics. “But stockpiles are not low, and I think overall, it would have to be closed for a longer period of time before it impacted prices in the longer term.” Crude oil prices, which jumped 7% Friday after Israel’s initial attack on Iran, were softer in early trading Monday. Benchmark Brent crude was trading at $71.37 per barrel, down about 4%, according to Bloomberg. Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

The Iranian government’s threat to close the Strait of Hormuz amid Israel’s attack on the country would tie up already stretched global container capacity, cut off Jebel Ali and Abu Dhabi ports and put upward pressure on bunker fuel costs. Just 2% to 3% of global container traffic moves through the vital chokepoint for crude oil transport, according to data from Container Trade Statistics (CTS). Nonetheless, a restriction on container traffic through the strait, making deployed tonnage ineffective, would put upward pressure on freight rates and extend transit times. Sea-Intelligence Maritime Analysis warned of major problems for container shipping should the strait be closed. “At the time of writing this, the two countries are exchanging continuous barrages of missiles and drones,” Sea-Intelligence CEO Alan Murphy wrote in the Sunday Spotlight newsletter. “For now, this has not led to any impact on commercial shipping in the Strait of Hormuz, and we should hope this to not become the case. If that happens, it will have a significant impact on container shipping flows to the major transshipment hubs in the region.” Dubai’s Jebel Ali was the 10th largest global container port as measured by volume in 2024, according to Alphaliner, while Khalifa is Abu Dhabi’s flagship container port. The container shipping market had already been stretched due to hostilities in the region, with container lines diverting away from the Gulf of Aden and Red Sea since late 2023 because of attacks from Houthi militants operating in Yemen. Most recently, carriers have repositioned capacity back to the trans-Pacific to handle rebounding Asia import volumes amid a pause in US tariffs. The idling of the global fleet is under 1% and the charter market for container ships remains elevated, according to analyst Alphaliner, reflecting stretched container capacity from not just Red Sea diversions, but port congestion in Europe, and, to a lesser degree, in Asia. According to Platts, a sister company of the Journal of Commerce within S&P Global, more than 17 million barrels of crude oil each day move through the Strait of Hormuz, coming not just from Iran, but from Saudi Arabia, Kuwait, the UAE and Qatar. That is more than 20% of daily global crude production. “If the Strait of Hormuz was to close, in the midterm it would be disruptive to the oil and bunker industry if they’re not able to get crude product transported out of the Persian Gulf, which is going to lead to a price disruption,” said Michael Aldwell, Kuehne +Nagel’s executive vice president of sea logistics. “But stockpiles are not low, and I think overall, it would have to be closed for a longer period of time before it impacted prices in the longer term.” Crude oil prices, which jumped 7% Friday after Israel’s initial attack on Iran, were softer in early trading Monday. Benchmark Brent crude was trading at $71.37 per barrel, down about 4%, according to Bloomberg. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Container Shipping News

Port News

International ports

Closure of Strait of Hormuz would further stretch global container capacity

<div class="phx-topic abstract-wrapper">The loss of An-124 heavy-lift air capacity will force a modal shift to ocean or a reduction in cargo sizes to fit into smaller craft, experts say.</div>

The loss of An-124 heavy-lift air capacity will force a modal shift to ocean or a reduction in cargo sizes to fit into smaller craft, experts say.

<div class="phx-topic">The clock is ticking on the medium-term availability of aircraft for heavy-lift cargoes, with soaring demand clashing with an aging specialized fleet and no clear path to replacing assets. Consensus among specialists in the sector is that the current An-124, while capable of life-extending modifications, has a finite lifespan. The An-124 is the world’s heaviest gross weight production cargo airplane currently operating. Luís Branco, managing director of project freight forwarder L Branco Lda, questioned the future of these heavy-lift air cargo workhorses. “Their life can be extended, but there will be some point in time when there can be no more extensions,” he said.Replacing these giants is a monumental task. “It costs not only millions to develop them, but years to design and then you need to find someone to finance it,” Branco added. Ruslan Bykovets, head of air transportation at Ukraine-based Antonov Airlines, operator of seven An-124s, said that the first of those aircraft will reach the end of its operational life in 2034. Bykovets told the Journal of Commerce that Antonov is working on a modernization program that will add 10 more years to their working life.However, Ritesh Nair, head of projects at project cargo forwarder Rhenus Projects, acknowledged the modernization program was just a “soft stop-gap arrangement.”International sanctions applied against Russia in response to its 2022 invasion of Ukraine have exacerbated the heavy-lift aircraft availability problem. “When sanctions were applied to Russia in 2022 the number of available fleet on the market dropped 60%,” Bykovets said. That dramatic reduction, coupled with rising demand, has inevitably led to higher air charter rates. <h3>Financiers and builders needed</h3>Market experts raise the question of who will build the next generation of heavy-lift aircraft, ruling out manufacturers such as Boeing or Airbus. Without new investment, Bykovets said heavy air freight cargoes will either need to be sent by sea — with much longer transit times — or cargoes will need to be dismantled to fit into 747s or 777s. However, he said the latter is not an option for extra heavy cargo, such as transformers or refinery station engines.When the An-124s were first manufactured, they were funded by the government for military purposes. “Any entrepreneur today would be a little skeptical about laying out so much money, so a government agency has to step in to be able to fund these,” Nair said. In the face of those challenges, he said “out of the box solutions” could be explored, such as cargo going “to where the aircraft is” instead of the other way around. Nair also championed consolidation. “Most of the charters that are happening are full charters, and a lot of space gets wasted,” he said. “So, can a couple of forwarders or even Antonov entertain other inquiries, bring two cargoes together and flying them out?”But Bykovets said that would not be feasible as each chartered An-124 flight is a unique project, noting that adding another piece of heavy-lift cargo to the same flight would mean "twice the amount of people needed to load it." Clients paying $1.5 million for a full charter would not want third-party cargo included in their chartered aircraft, he added. Despite the challenges, demand for heavy-lift air cargo remains robust. Bykovets identified military assets as the top cargo, followed by aerospace, adding that “the numbers of aerospace cargo has increased five times since COVID.” He said that oil and gas-linked air freight demand is starting to grow again, while heavy-lift air cargoes for the power market are also on the rise.Contact Carly Fields at <a href="mailto:carly.fields@spglobal.com">carly.fields@spglobal.com</a>.</div>

The clock is ticking on the medium-term availability of aircraft for heavy-lift cargoes, with soaring demand clashing with an aging specialized fleet and no clear path to replacing assets. Consensus among specialists in the sector is that the current An-124, while capable of life-extending modifications, has a finite lifespan. The An-124 is the world’s heaviest gross weight production cargo airplane currently operating. Luís Branco, managing director of project freight forwarder L Branco Lda, questioned the future of these heavy-lift air cargo workhorses. “Their life can be extended, but there will be some point in time when there can be no more extensions,” he said. Replacing these giants is a monumental task. “It costs not only millions to develop them, but years to design and then you need to find someone to finance it,” Branco added. Ruslan Bykovets, head of air transportation at Ukraine-based Antonov Airlines, operator of seven An-124s, said that the first of those aircraft will reach the end of its operational life in 2034. Bykovets told the Journal of Commerce that Antonov is working on a modernization program that will add 10 more years to their working life. However, Ritesh Nair, head of projects at project cargo forwarder Rhenus Projects, acknowledged the modernization program was just a “soft stop-gap arrangement.” International sanctions applied against Russia in response to its 2022 invasion of Ukraine have exacerbated the heavy-lift aircraft availability problem. “When sanctions were applied to Russia in 2022 the number of available fleet on the market dropped 60%,” Bykovets said. That dramatic reduction, coupled with rising demand, has inevitably led to higher air charter rates. Financiers and builders needed Market experts raise the question of who will build the next generation of heavy-lift aircraft, ruling out manufacturers such as Boeing or Airbus. Without new investment, Bykovets said heavy air freight cargoes will either need to be sent by sea — with much longer transit times — or cargoes will need to be dismantled to fit into 747s or 777s. However, he said the latter is not an option for extra heavy cargo, such as transformers or refinery station engines. When the An-124s were first manufactured, they were funded by the government for military purposes. “Any entrepreneur today would be a little skeptical about laying out so much money, so a government agency has to step in to be able to fund these,” Nair said. In the face of those challenges, he said “out of the box solutions” could be explored, such as cargo going “to where the aircraft is” instead of the other way around. Nair also championed consolidation. “Most of the charters that are happening are full charters, and a lot of space gets wasted,” he said. “So, can a couple of forwarders or even Antonov entertain other inquiries, bring two cargoes together and flying them out?” But Bykovets said that would not be feasible as each chartered An-124 flight is a unique project, noting that adding another piece of heavy-lift cargo to the same flight would mean "twice the amount of people needed to load it." Clients paying $1.5 million for a full charter would not want third-party cargo included in their chartered aircraft, he added. Despite the challenges, demand for heavy-lift air cargo remains robust. Bykovets identified military assets as the top cargo, followed by aerospace, adding that “the numbers of aerospace cargo has increased five times since COVID.” He said that oil and gas-linked air freight demand is starting to grow again, while heavy-lift air cargoes for the power market are also on the rise. Contact Carly Fields at carly.fields@spglobal.com .

Air Cargo

Heavy-haul transport

Project cargo

Breakbulk News

Market seeks to navigate medium-term cuts to heavy-lift air cargo capacity

<div class="phx-topic abstract-wrapper">OTR Capital argues DAT, the largest load board for truckload freight in North America, violated a non-compete clause when it acquired factoring company Outgo in May. </div>

OTR Capital argues DAT, the largest load board for truckload freight in North America, violated a non-compete clause when it acquired factoring company Outgo in May.

<div class="phx-topic">A court in Georgia has ordered DAT Freight &amp; Solutions to stop providing factoring service until a hearing can be held on whether DAT is violating a non-compete agreement with OTR Capital. DAT, the largest load board for truckload freight in North America, stressed that the June 10 order from the Superior Court of Cobb County is temporary. DAT is being sued by OTR. “We believe the suit is without merit and will defend ourselves vigorously,” DAT said in a statement Friday. “We are concerned that OTR’s actions directly impact the cash flow of our carrier customers,” it added. “Cash flow is the lifeblood of these small businesses, and any disruption to it can severely impede their operations.” Freight factoring is a financial service in which carriers sell their unpaid invoices to a third party that advances them the cash they are owed, generally in exchange for a single-digit percentage of the invoice amount. DAT has offered factoring services to its carrier customers since 2007 via external partnerships, most recently with OTR Solutions. DAT’s <a href="https://www.joc.com/article/dat-acquires-trucker-tools-in-move-to-reduce-load-board-driver-churn-5907848">acquisition of Outgo</a> last month led to the complaint from OTR. OTR Capital, a part of OTR Solutions, claimed the Outgo deal violated a non-compete clause in its agreement with DAT. In the June 10 ruling, Senior Judge Adele Grubbs ordered DAT not to compete with OTR through Outgo or any other factoring service. Grubbs also ordered DAT to cease providing any factoring services through Outgo. The order, issued in response to a request for emergency relief from OTR, lasts until a full hearing is held on the case. OTR, in a June 12 filing, claimed DAT has violated that order. “DAT has refused to expressly confirm that it has stopped providing all factoring services to its existing clients,” OTR said in the filing. The acquisition of Outgo is part of DAT’s efforts to expand its platform, grounded in truckload spot market load-matching. The acquisition was DAT’s second in six months, after it <a href="https://www.joc.com/article/dat-acquires-trucker-tools-in-move-to-reduce-load-board-driver-churn-5907848">acquired Trucker Tools</a>, a load visibility tool for brokers, in December. “As this is pending litigation, we have no further comment on the case itself at this time,” DAT said in its statement. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

A court in Georgia has ordered DAT Freight & Solutions to stop providing factoring service until a hearing can be held on whether DAT is violating a non-compete agreement with OTR Capital. DAT, the largest load board for truckload freight in North America, stressed that the June 10 order from the Superior Court of Cobb County is temporary. DAT is being sued by OTR. “We believe the suit is without merit and will defend ourselves vigorously,” DAT said in a statement Friday. “We are concerned that OTR’s actions directly impact the cash flow of our carrier customers,” it added. “Cash flow is the lifeblood of these small businesses, and any disruption to it can severely impede their operations.” Freight factoring is a financial service in which carriers sell their unpaid invoices to a third party that advances them the cash they are owed, generally in exchange for a single-digit percentage of the invoice amount. DAT has offered factoring services to its carrier customers since 2007 via external partnerships, most recently with OTR Solutions. DAT’s acquisition of Outgo last month led to the complaint from OTR. OTR Capital, a part of OTR Solutions, claimed the Outgo deal violated a non-compete clause in its agreement with DAT. In the June 10 ruling, Senior Judge Adele Grubbs ordered DAT not to compete with OTR through Outgo or any other factoring service. Grubbs also ordered DAT to cease providing any factoring services through Outgo. The order, issued in response to a request for emergency relief from OTR, lasts until a full hearing is held on the case. OTR, in a June 12 filing, claimed DAT has violated that order. “DAT has refused to expressly confirm that it has stopped providing all factoring services to its existing clients,” OTR said in the filing. The acquisition of Outgo is part of DAT’s efforts to expand its platform, grounded in truckload spot market load-matching. The acquisition was DAT’s second in six months, after it acquired Trucker Tools , a load visibility tool for brokers, in December. “As this is pending litigation, we have no further comment on the case itself at this time,” DAT said in its statement. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

Logistics Technology News

Truckload

Surface

Court orders DAT to temporarily halt trucking factoring service

<div class="phx-topic abstract-wrapper">UP’s new protection program for high-value freight comes amid heightened concerns over cargo theft in the US and will cost users $100 per container.</div>

UP’s new protection program for high-value freight comes amid heightened concerns over cargo theft in the US and will cost users $100 per container.

<div class="phx-topic">Union Pacific Railroad (UP) will launch a new insurance program on July 1 offering shippers up to $250,000 in liability coverage against cargo theft, more than double the company’s existing protection. That additional protection, however, comes with tighter security requirements, more logistical planning, and added costs. UP’s so-called “High-Value Product” program comes amid heightened concerns over cargo theft in the US, a growing problem in the rail industry. Criminal networks have become <a href="https://www.joc.com/article/tpm25-bnsf-ceo-says-fighting-cargo-theft-requires-collective-effort-5956508">increasingly sophisticated</a>, sabotaging trains and signal systems, deploying counter-surveillance teams to detect law enforcement and drones, and obtaining insider details about the contents of individual containers, according to the Los Angeles Times. UP’s standard liability coverage is $100,000 per container. The new tier of coverage would bring the railroad in line with its chief rival, BNSF Railway, which already provides up to $250,000 in coverage for high-value goods. The enhanced coverage with UP will come at a cost — a surcharge of $100 per container. UP announced the new insurance program via a policy change posted on <a href="https://www.up.com/customers/announcements/premium/policyandprograms/PR2025-41.html">its website</a>; the railroad did not respond to a request for comment about the program from the Journal of Commerce. High-value cargo carried by railroads is often loaded in the bottom well of a double-stack train, where the container doors are positioned flush against the steel frame of the railcar and topped with another container. It is unclear, however, whether all of UP’s “High-Value Product” freight will be placed in the bottom well. <h3>Extra work for shippers </h3>To qualify for the $250,000 in coverage, shippers must use a special commodity code for high-value cargo that charges a higher per-container fee. They are also expressly prohibited from using plastic seals on their freight, and instead must use specialized high-security locks and theft-deterrent barrier seals that go around the container door. Customers must also include the pin number for the seal in the paperwork filed with UP and take digital, date-stamped photographs showing the container number, seal application and lock with its unique identification number visible. BNSF Railway does not require specialized locks and theft-deterrent seals as part of its $250,000 liability program. It charges $80 per container for the higher-cost policy. In general, while shippers and intermodal marketing companies support enhanced efforts to combat cargo theft, some have raised concerns about the logistics of reusing high-security locks and barrier seals. For instance, if a shipper sends a container from Los Angeles to Chicago using a specialized locking device, it is unclear how that hardware would be returned to Southern California for reuse, or who would bear the costs involved. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>.</div>

Union Pacific Railroad (UP) will launch a new insurance program on July 1 offering shippers up to $250,000 in liability coverage against cargo theft, more than double the company’s existing protection. That additional protection, however, comes with tighter security requirements, more logistical planning, and added costs. UP’s so-called “High-Value Product” program comes amid heightened concerns over cargo theft in the US, a growing problem in the rail industry. Criminal networks have become increasingly sophisticated , sabotaging trains and signal systems, deploying counter-surveillance teams to detect law enforcement and drones, and obtaining insider details about the contents of individual containers, according to the Los Angeles Times. UP’s standard liability coverage is $100,000 per container. The new tier of coverage would bring the railroad in line with its chief rival, BNSF Railway, which already provides up to $250,000 in coverage for high-value goods. The enhanced coverage with UP will come at a cost — a surcharge of $100 per container. UP announced the new insurance program via a policy change posted on its website ; the railroad did not respond to a request for comment about the program from the Journal of Commerce. High-value cargo carried by railroads is often loaded in the bottom well of a double-stack train, where the container doors are positioned flush against the steel frame of the railcar and topped with another container. It is unclear, however, whether all of UP’s “High-Value Product” freight will be placed in the bottom well. Extra work for shippers To qualify for the $250,000 in coverage, shippers must use a special commodity code for high-value cargo that charges a higher per-container fee. They are also expressly prohibited from using plastic seals on their freight, and instead must use specialized high-security locks and theft-deterrent barrier seals that go around the container door. Customers must also include the pin number for the seal in the paperwork filed with UP and take digital, date-stamped photographs showing the container number, seal application and lock with its unique identification number visible. BNSF Railway does not require specialized locks and theft-deterrent seals as part of its $250,000 liability program. It charges $80 per container for the higher-cost policy. In general, while shippers and intermodal marketing companies support enhanced efforts to combat cargo theft, some have raised concerns about the logistics of reusing high-security locks and barrier seals. For instance, if a shipper sends a container from Los Angeles to Chicago using a specialized locking device, it is unclear how that hardware would be returned to Southern California for reuse, or who would bear the costs involved. Contact Ari Ashe at ari.ashe@spglobal.com .

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Union Pacific will offer shippers enhanced liability coverage for cargo theft

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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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