<div class="phx-topic abstract-wrapper">I can recall some months back, writing a column on the advent of the Malaccamax container ship. That</div>

I can recall some months back, writing a column on the advent of the Malaccamax container ship. That

<div>I can recall some months back, writing a column on the advent of the Malaccamax container ship. That Goliath of steel, with cell guides and open deck spaces sufficient to carry up to 18,000 containers so efficiently as to make its presence felt in year-end financials, remains to be ordered.However, in my naivet of this container shipping business, I questioned the feasibility of such a project, and reasoned that the real costs of such a vast floating hulk would financially hurt even the cleverest of shipowners.Based on what I had been told, and on the limited knowledge I have about...

I can recall some months back, writing a column on the advent of the Malaccamax container ship. That Goliath of steel, with cell guides and open deck spaces sufficient to carry up to 18,000 containers so efficiently as to make its presence felt in year-end financials, remains to be ordered. However, in my naivet of this container shipping business, I questioned the feasibility of such a project, and reasoned that the real costs of such a vast floating hulk would financially hurt even the cleverest of shipowners.Based on what I had been told, and on the limited knowledge I have about such things, I made sure everyone knew I didn't believe ships of half that size would be built. And so, it is with head hung low this week, that I have to admit that when I claimed the 18,000-TEU container ship was a mere myth, I may have been shortsighted. Emphasis on the word 'may.' That is because this week P&O Nedlloyd, one of the world's most progressive shipping lines, said it could be operating ships up to 10,000-TEU capacity by 2003. And if that happens, then it could be assumed that the capacity ceiling could conceivably reach the Malaccamax level before long, and the technical know-how of Dutch professor who developed the Malaccamax design may not be so questionable after all. But like most Brits, I never take things on face value. My ancestors never did, so why should I? Was I really wrong? I'm not so sure. I have that niggling feeling that Robert Woods, who moved into Tim Harris's top role at P&O Nedlloyd headquarters in London some months back, may have been prompted into saying something his technical gurus may find disturbing. Backed up with record third-quarter financial results this year, the P&O Nedlloyd folks were understandably enthusiastic about the future. The Anglo-Dutch company posted operating profits of $75 million in the three months to Sept. 30, a $59 million improvement on the year-earlier period and a $31 million gain on the second quarter. P&O Nedlloyd is doing well at last. The hard slog is over, and the so-called benefits of their 1997 are finally starting to be realized, thanks to a continuing strong market for container carriers. The company is on track to do what it said it always would do. But despite all that good news, to say P&O Nedlloyd could be operating ships up to 10,000-TEU capacity by 2003 may be a stretch. Here's why. The only shipyards capable of building such ships are in Korea, Japan and Denmark. Of course, it is hard to envisage A.P. Moller's Odense Steel shipyard building for the competition, so it really comes down to the Asian yards. The only shipyard to openly market blueprint plans for ships around the 10,000-TEU size is Samsung Heavy Industries. Talking to the marketing executives in Korea last week, it was clear while there are some fine designs for ships around 9,800 TEUs from the Koje Shipyard of Samsung, as to the level of interest from shipowners, the official word was, 'Not yet.' 'No, there is nothing concrete at the moment. We've had some interest in our new design, but that's as far as it goes,' said one company official. Yards in Korea and Japan are currently short of capacity for container ship projects. A series of five 6,200-TEU ships for NYK Line on order at Samsung means any megaship capacity for container vessel is taken up there until mid-2003. Samsung's move into the skyrocketing VLCC tanker sector also ensures that building the occasional prefabricated boxship hull structure in one dock and finishing the building process elsewhere is out of the question. Of course, one of the amusing things about this life is that we all try to outdo each other. That's what competitiveness is all about. It's a well-known fact that P&O Nedlloyd and Maersk Sealand are competitors, even though they're partners in the multi-million dollar Inttra portal venture. Maersk Sealand has big ships as well, and what one does, the other will do shortly thereafter. Personally, I cannot believe the 18,000-, 15,000-, 12,000- or even 10,000-TEU container ship will be built in the near future. Sure, steel hulls can be extended to accept more steel boxes. Ports can get bigger cranes, and dredging companies can suck and grab the sands from the seabed to help it all happen. But, in the end it really comes down to operational costs, that wonderful cost per TEU for operating a steel hull of slot space. In simple terms, I am always open to criticism, and I'm British, so I'm used to it. But if P&O Nedlloyd operates 10,000-TEU ships by 2003, and the Malaccamax becomes reality, I will personally apologize in these columns for my misunderstandings of this industry. But don't hold your breath. Paul Richardson can be reached at 011-44-208-942-1993 or xdd80@dial.pipex.com . Richardson is the editor of PR News Service, an e-mail news service covering container shipping.

WHITHER THE MALACCAMAX?

<div class="phx-topic abstract-wrapper">Well-financed LTL trucking companies are investing in network expansion despite flat revenues and falling shipment counts as shippers demand more speed. </div>

Well-financed LTL trucking companies are investing in network expansion despite flat revenues and falling shipment counts as shippers demand more speed.

Feature image

<div class="phx-topic">A long-term realignment of the US less-than-truckload (LTL) sector is continuing as LTL carriers expand their networks despite weak demand for palletized freight. Former Yellow-owned facilities continue to be brought back online, by both long-haul and regional carriers, two years after Yellow’s bankruptcy closed more than 200 terminals. Regional and long-haul LTL companies alike are not just adding terminals, but lanes and services as well as the battle to win a diminishing amount of daily shipments intensifies. “Freight is not seeking carriers, so carriers need to seek freight,” Chris Jamroz, executive chairman and CEO of Roadrunner, told the Journal of Commerce. Freight volumes may be low, but the speed of the LTL business is picking up, he noted. ”We see a significant migration away from a time-deferred market,” Jamroz said. “Shippers cannot tolerate delays, and people are looking for more time-definite guarantees.” Roadrunner, based in the Chicago area, added 100 new lanes to its network this month – many of them shorter-haul lanes connecting the Midwest to other regions. It also opened a hub in Kansas City, Mo. “We added 20% to our existing portfolio of guaranteed (on-time delivery) lanes,” Jamroz said. “We continue to expand geographically. We opened a lot of new lanes that are shorter in mileage than our average lane,” especially with the Midwest. Roadrunner isn’t the only LTL carrier focusing on the Midwest, where the collapse of Yellow brought down regional midwestern LTL provider Holland, creating a gap still unfilled. Northeast regional carrier A. Duie Pyle this month opened terminals in Columbus and Toledo, Ohio, strengthening next-day LTL service between Ohio and the mid-Atlantic and Northeast. “We’ll open (a terminal in) Cincinnati probably in late September or early October,” said John Luciani, COO of LTL Solutions for Pyle. “I feel bullish about that. That will complete full state coverage in Ohio.” But it’s the speed that counts for Pyle, as much as the coverage. Previously, West Chester, Pa.-based Pyle partnered with midwestern carrier Dayton Freight Lines to move freight from Ohio to Pennsylvania, Maryland, Washington, D.C., and Virginia, Luciani said. “The best service we were going to provide through partnership was two days and competition was overnight” from the Midwest to East Coast, he said. Based on data from SMC3, Luciani estimates only 44% of the shipments moved daily from Ohio to the “Mid-Atlantic Corridor” are delivered the next day. “We see that as an opportunity,” he said. “We have customers who said if we expanded into Columbus or Toledo they would reward us with business.” <h3>Waiting for wheels to turn </h3>More business is what LTL carriers want. Public and privately-owned carriers alike say freight volumes are down year over year, and there’s no immediate sign they will rise. “We’ve had a few head fakes from an economic standpoint,” Old Dominion Freight Line (ODFL) CFO Adam Satterfield told analysts during a second-quarter earnings call Wednesday. Daily shipments at ODFL, the largest US LTL provider after FedEx Freight, dropped 7.3% in the quarter from a year ago. ”I’d love for revenue to be higher, and I’d love for this cycle to turn,” Satterfield said. “There have been a couple of times that we felt like it was turning.” Manufacturing may be a cause for some optimism. The S&amp;P Global purchasing manager’s index (PMI) for US manufacturing rose from 52 in May to 52.9 in June, signaling stronger expansion. Manufacturing output increased for the first time since February. The Institute for Supply Management (ISM) PMI remains in contraction however, although it improved from a reading of 48.5 in May to 49 in June. The threat of higher US tariffs has been a drag on industrial production and freight, Satterfield said. “It's hard if you're a manufacturer, for example, to figure out what the cost structure is going to be when you don't really know what the final tariff cost might be,” he said. “I think that's something that we've had a lot of customers trying to figure out.” Satterfield said he feels the US economy is closer to improvement, “but we want to turn that feeling into true freight and see it coming on board.” XPO, the fourth-largest US LTL provider, opened large terminals in Carlisle, Pa., and Greensboro, N.C., in the first half of 2025 despite a decline in volume. XPO’s daily shipment count dropped 5.1% year over year to 50,782 in the second quarter. The Carlisle terminal has 281 doors, while the Greensboro facility, located in Kernersville between Greensboro and Winston-Salem, has 333 doors. Both were among the 28 terminals XPO acquired from bankrupt Yellow. XPO also added almost 500 tractors to its fleet in the second quarter as it reduced outsourced transportation to 6.8% of total fleet mileage. The Greenwich, Conn.-based carrier added more than 5,000 small business customers in the second quarter. Expansion during a downcycle is not a luxury but a necessity, XPO CEO Mario Harik said. “You cannot invest in your network when the upcycle starts, it will be too late,” Harik told the Journal of Commerce. “Capacity right now is about 95% of what it was when Yellow was in operation,” he said. “When the upcycle starts next year, there will be less capacity than the market will need. That will be the tailwind of all tailwinds for LTL.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. </div>

A long-term realignment of the US less-than-truckload (LTL) sector is continuing as LTL carriers expand their networks despite weak demand for palletized freight. Former Yellow-owned facilities continue to be brought back online, by both long-haul and regional carriers, two years after Yellow’s bankruptcy closed more than 200 terminals. Regional and long-haul LTL companies alike are not just adding terminals, but lanes and services as well as the battle to win a diminishing amount of daily shipments intensifies. “Freight is not seeking carriers, so carriers need to seek freight,” Chris Jamroz, executive chairman and CEO of Roadrunner, told the Journal of Commerce. Freight volumes may be low, but the speed of the LTL business is picking up, he noted. ”We see a significant migration away from a time-deferred market,” Jamroz said. “Shippers cannot tolerate delays, and people are looking for more time-definite guarantees.” Roadrunner, based in the Chicago area, added 100 new lanes to its network this month – many of them shorter-haul lanes connecting the Midwest to other regions. It also opened a hub in Kansas City, Mo. “We added 20% to our existing portfolio of guaranteed (on-time delivery) lanes,” Jamroz said. “We continue to expand geographically. We opened a lot of new lanes that are shorter in mileage than our average lane,” especially with the Midwest. Roadrunner isn’t the only LTL carrier focusing on the Midwest, where the collapse of Yellow brought down regional midwestern LTL provider Holland, creating a gap still unfilled. Northeast regional carrier A. Duie Pyle this month opened terminals in Columbus and Toledo, Ohio, strengthening next-day LTL service between Ohio and the mid-Atlantic and Northeast. “We’ll open (a terminal in) Cincinnati probably in late September or early October,” said John Luciani, COO of LTL Solutions for Pyle. “I feel bullish about that. That will complete full state coverage in Ohio.” But it’s the speed that counts for Pyle, as much as the coverage. Previously, West Chester, Pa.-based Pyle partnered with midwestern carrier Dayton Freight Lines to move freight from Ohio to Pennsylvania, Maryland, Washington, D.C., and Virginia, Luciani said. “The best service we were going to provide through partnership was two days and competition was overnight” from the Midwest to East Coast, he said. Based on data from SMC3, Luciani estimates only 44% of the shipments moved daily from Ohio to the “Mid-Atlantic Corridor” are delivered the next day. “We see that as an opportunity,” he said. “We have customers who said if we expanded into Columbus or Toledo they would reward us with business.” Waiting for wheels to turn More business is what LTL carriers want. Public and privately-owned carriers alike say freight volumes are down year over year, and there’s no immediate sign they will rise. “We’ve had a few head fakes from an economic standpoint,” Old Dominion Freight Line (ODFL) CFO Adam Satterfield told analysts during a second-quarter earnings call Wednesday. Daily shipments at ODFL, the largest US LTL provider after FedEx Freight, dropped 7.3% in the quarter from a year ago. ”I’d love for revenue to be higher, and I’d love for this cycle to turn,” Satterfield said. “There have been a couple of times that we felt like it was turning.” Manufacturing may be a cause for some optimism. The S&P Global purchasing manager’s index (PMI) for US manufacturing rose from 52 in May to 52.9 in June, signaling stronger expansion. Manufacturing output increased for the first time since February. The Institute for Supply Management (ISM) PMI remains in contraction however, although it improved from a reading of 48.5 in May to 49 in June. The threat of higher US tariffs has been a drag on industrial production and freight, Satterfield said. “It's hard if you're a manufacturer, for example, to figure out what the cost structure is going to be when you don't really know what the final tariff cost might be,” he said. “I think that's something that we've had a lot of customers trying to figure out.” Satterfield said he feels the US economy is closer to improvement, “but we want to turn that feeling into true freight and see it coming on board.” XPO, the fourth-largest US LTL provider, opened large terminals in Carlisle, Pa., and Greensboro, N.C., in the first half of 2025 despite a decline in volume. XPO’s daily shipment count dropped 5.1% year over year to 50,782 in the second quarter. The Carlisle terminal has 281 doors, while the Greensboro facility, located in Kernersville between Greensboro and Winston-Salem, has 333 doors. Both were among the 28 terminals XPO acquired from bankrupt Yellow. XPO also added almost 500 tractors to its fleet in the second quarter as it reduced outsourced transportation to 6.8% of total fleet mileage. The Greenwich, Conn.-based carrier added more than 5,000 small business customers in the second quarter. Expansion during a downcycle is not a luxury but a necessity, XPO CEO Mario Harik said. “You cannot invest in your network when the upcycle starts, it will be too late,” Harik told the Journal of Commerce. “Capacity right now is about 95% of what it was when Yellow was in operation,” he said. “When the upcycle starts next year, there will be less capacity than the market will need. That will be the tailwind of all tailwinds for LTL.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

Surface

Trucking News

LTL carriers expanding US networks despite low freight demand

<div class="phx-topic abstract-wrapper">Local liner sources who spoke with the Journal of Commerce signaled that carriers would cancel increase notices scheduled for Aug. 1 and instead extend existing prices through the first half of the month.</div>

Local liner sources who spoke with the Journal of Commerce signaled that carriers would cancel increase notices scheduled for Aug. 1 and instead extend existing prices through the first half of the month.

<div class="phx-topic">Container carriers covering Indian westbound trades to the US are reconsidering the rate increases they had lined up for August because of an uncertain market environment stemming from the new tariffs that will hit the market. Local liner sources who spoke with the Journal of Commerce signaled that carriers would cancel increase notices scheduled for Aug. 1 and instead extend existing prices through the first half of the month after no noticeable volume gains were seen in the early days of peak shipping season. “There is just no room to push rates higher in the near term,” said a sales executive at a European carrier who asked not to be identified. “At best, we might be able to hold current rates somewhat firm for now.” Sources said that a significant cut in capacity from multiple blank sailings — reportedly six void calls across three India-US East Coast connections in July — has effectively helped carriers fill vessels to their full allocations in recent weeks. But with no major schedule disruptions reported for August, barring just two anticipated skips on Ocean Network Express’ (ONE’s) WIN loop, lead carriers remain skeptical about their ability to reach allocation targets without downward rate corrections. Asian carriers, mainly Cosco Shipping and subsidiary OOCL, have already dropped spot rates on the trade lane — down to between $2,000 and $2,100 per FEU versus the $2,500 to $2,800 price range held by their European peers, sources say. Platts, a sister company of the Journal of Commerce within S&amp;P Global, pegged India-US East Coast spot rates at $2,633 per FEU as of July 30. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="56199e2b-5df4-468f-a149-b18ae7c32e51"></dynamic-object></div>Meanwhile, a 25% US tariff on Indian-origin goods that begins Aug. 1, plus an unspecified penalty for trading with Russia, has amplified those trade concerns. Tariff stability, now key to India-US trade expansion, hinges on a new bilateral trade deal both sides have been negotiating over the past few months, with breakthroughs ostensibly stalled by certain market access differences. Another round of talks is now scheduled for late August. Amid lingering uncertainty, many US buyers are said to be holding back on lifting Indian shipments already on order and/or placing new procurement plans. Sunil Vaswani, executive director of the Container Shipping Lines Association (India), believes the higher scale of US tariffs could significantly hurt Indian export flows, primarily pharmaceuticals, seafood and textiles and apparel. “The situation is being closely watched by the trade, including carriers,” he said. Other industry sources echoed that sentiment. “Indian exporters and US importers are now unable to accurately calculate landed costs or plan how to absorb the elevated tariff burden,” said Ajay Sahai, director-general at the Federation of Indian Exports Organization. “This lack of predictability is disrupting supply chain planning and pricing decisions.” Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>. </div>

Container carriers covering Indian westbound trades to the US are reconsidering the rate increases they had lined up for August because of an uncertain market environment stemming from the new tariffs that will hit the market. Local liner sources who spoke with the Journal of Commerce signaled that carriers would cancel increase notices scheduled for Aug. 1 and instead extend existing prices through the first half of the month after no noticeable volume gains were seen in the early days of peak shipping season. “There is just no room to push rates higher in the near term,” said a sales executive at a European carrier who asked not to be identified. “At best, we might be able to hold current rates somewhat firm for now.” Sources said that a significant cut in capacity from multiple blank sailings — reportedly six void calls across three India-US East Coast connections in July — has effectively helped carriers fill vessels to their full allocations in recent weeks. But with no major schedule disruptions reported for August, barring just two anticipated skips on Ocean Network Express’ (ONE’s) WIN loop, lead carriers remain skeptical about their ability to reach allocation targets without downward rate corrections. Asian carriers, mainly Cosco Shipping and subsidiary OOCL, have already dropped spot rates on the trade lane — down to between $2,000 and $2,100 per FEU versus the $2,500 to $2,800 price range held by their European peers, sources say. Platts, a sister company of the Journal of Commerce within S&P Global, pegged India-US East Coast spot rates at $2,633 per FEU as of July 30. Meanwhile, a 25% US tariff on Indian-origin goods that begins Aug. 1, plus an unspecified penalty for trading with Russia, has amplified those trade concerns. Tariff stability, now key to India-US trade expansion, hinges on a new bilateral trade deal both sides have been negotiating over the past few months, with breakthroughs ostensibly stalled by certain market access differences. Another round of talks is now scheduled for late August. Amid lingering uncertainty, many US buyers are said to be holding back on lifting Indian shipments already on order and/or placing new procurement plans. Sunil Vaswani, executive director of the Container Shipping Lines Association (India), believes the higher scale of US tariffs could significantly hurt Indian export flows, primarily pharmaceuticals, seafood and textiles and apparel. “The situation is being closely watched by the trade, including carriers,” he said. Other industry sources echoed that sentiment. “Indian exporters and US importers are now unable to accurately calculate landed costs or plan how to absorb the elevated tariff burden,” said Ajay Sahai, director-general at the Federation of Indian Exports Organization. “This lack of predictability is disrupting supply chain planning and pricing decisions.” Contact Bency Mathew at bencyvmathew@gmail.com .

Maritime

Container Shipping News

Trans-Pacific

Container lines

India-US carriers likely to kill August rate hikes amid new tariff uncertainty

<div class="phx-topic abstract-wrapper">The legislation aims to incentivize a domestic crane industry and move US ports away from China’s dominant manufacturer.</div>

The legislation aims to incentivize a domestic crane industry and move US ports away from China’s dominant manufacturer.

<div class="phx-topic">Legislation that would provide tax credits for companies to build port cranes in the US has been introduced in the House of Representatives, the latest attempt to shift the manufacturing of logistics equipment away from China. The Port Cranes Tax Credit Act, introduced by Rep. Mike Ezell (R-Mississippi) would reduce “the financial burden for companies investing in American-made cranes and components ... and [cut] US reliance on foreign suppliers for critical port equipment,” Ezell’s office said in a statement Wednesday. The bill would provide a 25% investment tax credit for US companies to manufacture or repair ship-to-shore (STS) cranes. The bill also includes a 40% production tax credit that would rise to 60% if 90% of the crane’s components are also sourced in the US. The legislation takes direct aim at the stranglehold that Shanghai Zhenhua Heavy Industries (ZPMC) has on US port cranes, <a href="https://www.joc.com/article/us-ports-hit-back-at-white-house-move-to-levy-new-tariff-on-chinese-cranes-5192168">with an 80% market share</a>. Some in Congress have alleged that ZPMC cranes at US ports are security risks, offering hackers <a href="https://www.joc.com/article/white-house-counters-risk-of-chinese-port-cranes-with-20-billion-for-us-sourcing-5200230">a way to disrupt operations through remote monitoring software on the cranes</a>. “The threat of cyber intrusions and espionage from the Chinese Communist Party is real,” Rep. Jen Kiggans (R-Virginia), one of the bill’s co-sponsors, said in the statement. “I’m deeply concerned that so many of our ports are forced to use cranes manufactured by a Chinese state-owned company.” The legislation has received the endorsement of the American Association of Port Authorities (AAPA), with AAPA President Cary Davis saying the tax credit is “a tangible first step on the supply side toward incentivizing the reshoring of key cargo-handling equipment in the coming years since there are currently no domestic STS crane manufacturers.” The AAPA, though, has been less enthusiastic about other efforts to reshore crane manufacturing. The group said <a href="https://www.joc.com/article/ports-look-to-delay-proposed-us-tariffs-on-chinese-made-cranes-6007628">it was not in favor of the US Trade Representative’s proposed 100% tariff on Chinese-made cranes</a>, part of President Donald Trump’s strategy for the US to regain market share in the maritime logistics industry. The Biden administration kicked off efforts to reshore US STS crane manufacturing following reports of cyber intrusions at US ports, outlining in February 2024 <a href="https://www.joc.com/article/white-house-counters-risk-of-chinese-port-cranes-with-20-billion-for-us-sourcing-5200230">$20 billion in incentives</a> for companies to start making cranes in the US. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Legislation that would provide tax credits for companies to build port cranes in the US has been introduced in the House of Representatives, the latest attempt to shift the manufacturing of logistics equipment away from China. The Port Cranes Tax Credit Act, introduced by Rep. Mike Ezell (R-Mississippi) would reduce “the financial burden for companies investing in American-made cranes and components ... and [cut] US reliance on foreign suppliers for critical port equipment,” Ezell’s office said in a statement Wednesday. The bill would provide a 25% investment tax credit for US companies to manufacture or repair ship-to-shore (STS) cranes. The bill also includes a 40% production tax credit that would rise to 60% if 90% of the crane’s components are also sourced in the US. The legislation takes direct aim at the stranglehold that Shanghai Zhenhua Heavy Industries (ZPMC) has on US port cranes, with an 80% market share . Some in Congress have alleged that ZPMC cranes at US ports are security risks, offering hackers a way to disrupt operations through remote monitoring software on the cranes . “The threat of cyber intrusions and espionage from the Chinese Communist Party is real,” Rep. Jen Kiggans (R-Virginia), one of the bill’s co-sponsors, said in the statement. “I’m deeply concerned that so many of our ports are forced to use cranes manufactured by a Chinese state-owned company.” The legislation has received the endorsement of the American Association of Port Authorities (AAPA), with AAPA President Cary Davis saying the tax credit is “a tangible first step on the supply side toward incentivizing the reshoring of key cargo-handling equipment in the coming years since there are currently no domestic STS crane manufacturers.” The AAPA, though, has been less enthusiastic about other efforts to reshore crane manufacturing. The group said it was not in favor of the US Trade Representative’s proposed 100% tariff on Chinese-made cranes , part of President Donald Trump’s strategy for the US to regain market share in the maritime logistics industry. The Biden administration kicked off efforts to reshore US STS crane manufacturing following reports of cyber intrusions at US ports, outlining in February 2024 $20 billion in incentives for companies to start making cranes in the US. Contact Michael Angell at michael.angell@spglobal.com .

Port News

Port infrastructure

North American ports

Transport, Trade and Regulation News

Congress eyes a tax credit for reshoring port crane manufacturing

<div class="phx-topic abstract-wrapper">Higher costs and shifting deadlines are making business difficult for small cargo owners and those shipping low-value goods.</div>

Higher costs and shifting deadlines are making business difficult for small cargo owners and those shipping low-value goods.

<div class="phx-topic">For years, the guessing game for international logistics managers revolved around ocean freight rate levels and transit time predictability. But today, the biggest unknown for those same managers is the lack of certainty around how US tariffs will impact their total cost of goods sold. More import logistics managers, particularly for smaller cargo owners and those shipping low-value goods, are having to change sourcing locations or stop shipping from any of those spots entirely due to higher tariffs making the cost of buying the goods uneconomical. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6053066_0.1.jpg"></img></div>This is further complicated by shifting deadlines guiding when various tariffs take effect and forces another consideration on the part of logistics managers who are traditionally focused more on the cost of securing transportation. That broadens the degree to which those logistics managers need to think about things such as sourcing and trade compliance. Indeed, US tariff policy now swings more often and abruptly than ocean spot rates. Some US importers of India-sourced goods are now forced to reconsider whether to keep ordering from the country after President Donald Trump on Wednesday announced a 25% tariff, dealing a blow to India being seen as an emerging production alternative to China. US importers of goods from the European Union are weighing similar considerations <a href="https://www.joc.com/article/trans-atlantic-trade-dispute-averted-as-us-eu-reach-weekend-deal-6051144">after last weekend’s announcement</a> of a 15% US tariff, while the Aug 1. deadline for higher tariffs to kick in against other trade partners looms. The shipping industry is split on whether the deadline will hold or be pushed again after Trump granted an initial extension. A separate Aug. 14 deadline on higher China tariffs <a href="https://www.reuters.com/world/china/us-china-tariff-truce-holds-now-us-says-trump-has-final-say-2025-07-29/">appears headed for an extension</a> after US and Chinese officials failed to reach a deal during talks this week in Stockholm. <h3>Importers’ muddied planning </h3>The whiplash effect of the Trump administration’s trade policy is muddying the ability of US importers to plan in a way that OL USA President Alan Baer said he can’t recall seeing in his 50 years in the industry. US import customers have asked the forwarder to go as far as pulling containers off the docks at origin because the extent of US tariffs no longer makes importing feasible, he said. Other customers have, less dramatically, simply held off on placing new orders and leaned on production lines in countries less affected by US tariffs or they’ve significantly pulled back their orders. One US importer of women’s undergarments used to ship 100 containers monthly from China, but the current US tariffs at 30% make selling all the items to Walmart infeasible, he said. “So, they’re trying to reprice,” said Baer. “They’re looking at, okay, we can’t take it in China anymore, so they moved some sourcing to Ethiopia. They moved some sourcing to Ghana, and it’s a shell game for a lot of companies at the moment, waiting for the dust to settle to figure out where they should try to make stuff that they want to sell.” Larger retailers are certainly mindful of the changing tariff environment and can adjust where to source certain products, to a degree, when they have relationships with manufacturers in multiple countries. They also have more leverage to force the suppliers to take on more of the cost, allowing retailers to spare American consumers higher costs, for now. All this uncertainty translates into foggier-than-usual forecasts from cargo owners to carriers and results in shoulder shrugs from shippers when asked about demand in the medium term. It’s hardly surprising, then, that more container capacity than needed returned to the trans-Pacific after China bookings began rebounding in mid-May, when Trump announced the 90-day pause on US tariffs of 145%. Barometers of future import demand are of limited help to carriers. Consumer sentiment may be improving and the labor market resilient, but economists and a growing number of companies warn that the true impact of higher tariffs on the US economy will show in the cost of products in the second half of the year. The rise in the consumer price index, climbing to 2.7% in June from 2.4% in May — the highest since February — may signal that the impact of higher tariffs is only now beginning to be felt. Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

For years, the guessing game for international logistics managers revolved around ocean freight rate levels and transit time predictability. But today, the biggest unknown for those same managers is the lack of certainty around how US tariffs will impact their total cost of goods sold. More import logistics managers, particularly for smaller cargo owners and those shipping low-value goods, are having to change sourcing locations or stop shipping from any of those spots entirely due to higher tariffs making the cost of buying the goods uneconomical. This is further complicated by shifting deadlines guiding when various tariffs take effect and forces another consideration on the part of logistics managers who are traditionally focused more on the cost of securing transportation. That broadens the degree to which those logistics managers need to think about things such as sourcing and trade compliance. Indeed, US tariff policy now swings more often and abruptly than ocean spot rates. Some US importers of India-sourced goods are now forced to reconsider whether to keep ordering from the country after President Donald Trump on Wednesday announced a 25% tariff, dealing a blow to India being seen as an emerging production alternative to China. US importers of goods from the European Union are weighing similar considerations after last weekend’s announcement of a 15% US tariff, while the Aug 1. deadline for higher tariffs to kick in against other trade partners looms. The shipping industry is split on whether the deadline will hold or be pushed again after Trump granted an initial extension. A separate Aug. 14 deadline on higher China tariffs appears headed for an extension after US and Chinese officials failed to reach a deal during talks this week in Stockholm. Importers’ muddied planning The whiplash effect of the Trump administration’s trade policy is muddying the ability of US importers to plan in a way that OL USA President Alan Baer said he can’t recall seeing in his 50 years in the industry. US import customers have asked the forwarder to go as far as pulling containers off the docks at origin because the extent of US tariffs no longer makes importing feasible, he said. Other customers have, less dramatically, simply held off on placing new orders and leaned on production lines in countries less affected by US tariffs or they’ve significantly pulled back their orders. One US importer of women’s undergarments used to ship 100 containers monthly from China, but the current US tariffs at 30% make selling all the items to Walmart infeasible, he said. “So, they’re trying to reprice,” said Baer. “They’re looking at, okay, we can’t take it in China anymore, so they moved some sourcing to Ethiopia. They moved some sourcing to Ghana, and it’s a shell game for a lot of companies at the moment, waiting for the dust to settle to figure out where they should try to make stuff that they want to sell.” Larger retailers are certainly mindful of the changing tariff environment and can adjust where to source certain products, to a degree, when they have relationships with manufacturers in multiple countries. They also have more leverage to force the suppliers to take on more of the cost, allowing retailers to spare American consumers higher costs, for now. All this uncertainty translates into foggier-than-usual forecasts from cargo owners to carriers and results in shoulder shrugs from shippers when asked about demand in the medium term. It’s hardly surprising, then, that more container capacity than needed returned to the trans-Pacific after China bookings began rebounding in mid-May, when Trump announced the 90-day pause on US tariffs of 145%. Barometers of future import demand are of limited help to carriers. Consumer sentiment may be improving and the labor market resilient, but economists and a growing number of companies warn that the true impact of higher tariffs on the US economy will show in the cost of products in the second half of the year. The rise in the consumer price index, climbing to 2.7% in June from 2.4% in May — the highest since February — may signal that the impact of higher tariffs is only now beginning to be felt. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Supply chain

Tariff volatility puts smaller US importers in planning limbo

<div class="phx-topic abstract-wrapper">While not yet reflected in freight rates, analysts and forwarders report growing space constraints out of Southeast Asian origins. </div>

While not yet reflected in freight rates, analysts and forwarders report growing space constraints out of Southeast Asian origins.

<div class="phx-topic">European air freight importers are being indirectly affected by a tariff-driven shift in Asian trade flows that is putting capacity out of Southeast Asia under increasing pressure. While deployed air cargo capacity on routes from Southeast Asia to both Europe and the US remains flat this week compared with the average of the past four weeks, the shifting of volume from China to its southern neighbors is tightening available space, according to Jonathan Mellink, head of sales at air cargo analyst Rotate. “Shippers have shifted supply chains to cater for the differences in [US] tariff levies on different countries of origin, and we see these goods — computers, smartphones, auto parts — that were mostly coming out of China are being sourced in other locations,” Mellink told an air freight webinar hosted by Rhenus Logistics this week. For example, Mellink said 90% of all video game consoles were exported from China last year, but 50% of the products were now being sourced from Vietnam. Another example included Apple iPhones made in India, where significant volumes produced for the European market have been shifted to the US. While some electronics such as laptops, semiconductors and smartphones are excluded from the 10% US “reciprocal tariff” on Chinese imports, all imports of Chinese origin are subject to the 20% fentanyl tariff. “Shippers are trying to be agile and change their supply chains to benefit from at least some of the tariff differences out there,” Mellink said. Still, Chris Bode, vice president of global air freight at Rhenus Logistics, said exporters shifting thousands of tons of air freight from China to Southeast Asian manufacturing hubs such as Thailand and Vietnam risk overloading the outbound market. “[Thailand and Vietnam] are exporting roughly 40,000 tons a month on average, and when suddenly you have another 3,000 tons of a single commodity that was originally from China, it can affect global supply and demand,” Bode told the air freight webinar. “If a customer today is importing automotive-related cargo from Thailand into Germany, he will feel the impact of the US tariffs, even though he’s not involved directly with China-US trade,” he added. “It is important to understand how this new supply-demand is going to balance out and what its impact will be on customers that do not have direct trade flows with the US.” <h3>Keeping eggs ‘in the China basket’ </h3>The shifting of trade flows also poses a challenge to airlines, especially those deeply committed to the Chinese market, such as Abu Dhabi’s Etihad Airways. Leonard Rodrigues, director of revenue management and network planning at Etihad Cargo, told the webinar that the carrier in June signed a joint business agreement with Shenzhen-based SF Airlines, the largest cargo carrier in China. “It’s going to be very interesting to see what the impact of the tariffs and the trade volatility will be, because a big share of our eggs is in the China basket,” he told the air freight webinar, noting that Etihad in the past year has increased the number of weekly China flights from 11 to 18. However, Rodrigues said “making life easier” was the fact that Etihad Cargo had low exposure to the US, with only 3% of its freighter capacity deployed on Asia-US trade routes. Another factor insulating the carrier from the shifting trade flows was its size, as Etihad Cargo is a small player compared with the major air freight operators. Despite the shifting trade flows, Rodrigues pointed to the stability of air freight rates, with China-US rates this week close to levels seen during Chinese New Year in early February and China-North Europe up 10% over that time. China-North America rates were at $5.02 per kilogram this week while the China-Europe market was at $4.25/kg, according to the Baltic Air Index. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

European air freight importers are being indirectly affected by a tariff-driven shift in Asian trade flows that is putting capacity out of Southeast Asia under increasing pressure. While deployed air cargo capacity on routes from Southeast Asia to both Europe and the US remains flat this week compared with the average of the past four weeks, the shifting of volume from China to its southern neighbors is tightening available space, according to Jonathan Mellink, head of sales at air cargo analyst Rotate. “Shippers have shifted supply chains to cater for the differences in [US] tariff levies on different countries of origin, and we see these goods — computers, smartphones, auto parts — that were mostly coming out of China are being sourced in other locations,” Mellink told an air freight webinar hosted by Rhenus Logistics this week. For example, Mellink said 90% of all video game consoles were exported from China last year, but 50% of the products were now being sourced from Vietnam. Another example included Apple iPhones made in India, where significant volumes produced for the European market have been shifted to the US. While some electronics such as laptops, semiconductors and smartphones are excluded from the 10% US “reciprocal tariff” on Chinese imports, all imports of Chinese origin are subject to the 20% fentanyl tariff. “Shippers are trying to be agile and change their supply chains to benefit from at least some of the tariff differences out there,” Mellink said. Still, Chris Bode, vice president of global air freight at Rhenus Logistics, said exporters shifting thousands of tons of air freight from China to Southeast Asian manufacturing hubs such as Thailand and Vietnam risk overloading the outbound market. “[Thailand and Vietnam] are exporting roughly 40,000 tons a month on average, and when suddenly you have another 3,000 tons of a single commodity that was originally from China, it can affect global supply and demand,” Bode told the air freight webinar. “If a customer today is importing automotive-related cargo from Thailand into Germany, he will feel the impact of the US tariffs, even though he’s not involved directly with China-US trade,” he added. “It is important to understand how this new supply-demand is going to balance out and what its impact will be on customers that do not have direct trade flows with the US.” Keeping eggs ‘in the China basket’ The shifting of trade flows also poses a challenge to airlines, especially those deeply committed to the Chinese market, such as Abu Dhabi’s Etihad Airways. Leonard Rodrigues, director of revenue management and network planning at Etihad Cargo, told the webinar that the carrier in June signed a joint business agreement with Shenzhen-based SF Airlines, the largest cargo carrier in China. “It’s going to be very interesting to see what the impact of the tariffs and the trade volatility will be, because a big share of our eggs is in the China basket,” he told the air freight webinar, noting that Etihad in the past year has increased the number of weekly China flights from 11 to 18. However, Rodrigues said “making life easier” was the fact that Etihad Cargo had low exposure to the US, with only 3% of its freighter capacity deployed on Asia-US trade routes. Another factor insulating the carrier from the shifting trade flows was its size, as Etihad Cargo is a small player compared with the major air freight operators. Despite the shifting trade flows, Rodrigues pointed to the stability of air freight rates, with China-US rates this week close to levels seen during Chinese New Year in early February and China-North Europe up 10% over that time. China-North America rates were at $5.02 per kilogram this week while the China-Europe market was at $4.25/kg, according to the Baltic Air Index. Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo

Air Cargo Carriers News

Tariff-linked trade flow shift tightens Asian air freight capacity

Use code TPM25GW995 at checkout to save $500 on first year of a Gold subscription and 20% on a TPM26 registration!

Subscribe Now - FT/Anonymous to Gold - Wide Box

SAVE ON A GOLD SUBSCRIPTION AND TPM26

Use code GTW695 at checkout and save $800 on first year of an annual Gold subscription!

Upgrade Subscription - Gold Trials

Become a Gold Subscriber and Save!

Use code TPMGW595 at checkout to save $900 on first year of a Gold subscription and 20% on a TPM26 registration!

Upgrade Subscription - S/SP to Gold - Wide Box

UPGRADE TO GOLD FOR JUST $595

Arm your team with the most trusted information portal for the international container shipping industry.

Group Subscriptions - Wide Box

Get into a group subscription today

Access Journal of Commerce content for 30 days

Free Trial - Wide Box

START A FREE TRIAL TODAY

Use code STS20 at checkout to save 20% on a Silver or Silver Plus annual subscription! 

Subscribe Now - FT/Anonymous to S/SP - Wide Box

SUBSCRIBE AND SAVE

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

SMC3rates_shutterstock_5247046.jpg

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>

SMC3rates_shutterstock_5247046 (1).jpg

Filling the Supply Chain Education Gap with LTL Education Courses

SAVE ON A GOLD SUBSCRIPTION: Use code TPM25GW995 to save $500 on an annual Gold subscription and 20% on a TPM26 registration!

Subscribe Now - FT/Anonymous to Gold - Offer Box

UPGRADE TO GOLD AND SAVE: Use code GTW695 at checkout and save $800 on first year of a Gold subscription!

Upgrade Subscription

SUBSCRIBE AND SAVE: Use code STSW20 to save 20% on first year of a Silver or Silver Plus annual subscription!


Subscribe Now - FT/Anonymous to S/SP - Offer Box

GET INTO A GROUP SUBSCRIPTION: Arm your team with unlimited Journal of Commerce content

Group Subscriptions - Offer Box

Group Subscriptions

UPGRADE TO GOLD AND SAVE: Use code TPMGW595 at checkout to save $900 on first year of a Gold subscription and 20% on TPM26! 

Upgrade Subscription - S/SP to Gold - Offer Box

START A FREE TRIAL: Access Journal of Commerce content for 30 days

Free Trial - Offer Box

Free Trial

Monthly publication providing an editorial deep dive into global supply chain news

Journal of Commerce Magazine - Rectangle Box

Journal of Commerce Magazine

An in-depth analysis of transport trends in the multipurpose and heavy-lift fleet segment

Breakbulk Report - Rectangle Box

Breakbulk Quarterly

Customers scoring their intermodal partners to identify the best service providers

Latest News

More News & Analysis

LTL carriers expanding US networks despite low freight demand

India-US carriers likely to kill August rate hikes amid new tariff uncertainty

Congress eyes a tax credit for reshoring port crane manufacturing