Freight Forward: Gemini Begins While Panama Canal Questions Swirl

Welcome to Freight Forward, where each Monday, I’ll recap what happened in supply chains the previous week through JOC.com articles and additional sources and also what to expect for the week ahead.

I’m Cathy Roberson, a supply chain writer and researcher. For this weekly series, I serve as a research analyst for the Journal of Commerce (JOC), for whom I identify trends, provide thoughts and input into stories, and assist with air express and parcel last-mile queries.with air express and parcel last-mile queries.

Ocean Freight

• The new head of the US Federal Maritime Commission (FMC), Louis Sola, last Tuesday told a Senate hearing he questions whether a Hong Kong-based terminal operator that runs ports on both ends of the Panama Canal was contributing revenue to the Panamanian government as other terminal operators do writes Mark Szakonyi.

“What I don’t understand is why Panama would allow those two ports to operate [and] put [other canal operations] into jeopardy,” said Louis Sola, who was tapped by Donald Trump on Jan. 20 to serve as FMC chair. “I don’t believe we’re on a level playing field.”

• Ocean carriers on the trans-Pacific lane are quoting initial rates for the 2025–26 contract year about 25% higher than the current year on the belief they underpriced their services from Asia to the US a year ago, sources with knowledge of the early-stage talks say writes Bill Mongelluzzo and Laura Robb.

• Three sources familiar with the situation have told the?Journal of Commerce?the ILA will convene a midweek meeting in Florida of its local wage scale committees across the 14 ports under its jurisdiction. The wage scale committees will then present terms of the coastwide master contract, along with port-specific contracts, to local union members. A full vote by ILA members at East and Gulf coast ports is expected to take place near the end of February, with March the first full pay period under the new agreement. Meanwhile, the United States Maritime Alliance (USMX) board of directors reportedly approved the contract during a vote last Wednesday, according to the sources writes Michael Angell.
• Ocean Network Express (ONE) is expecting $4 billion in net profit for its operating year ending March 31, upping the forecast by almost $1 billion after posting a strong fiscal third quarter with significant gains in revenue and earnings. The full-year net profit as forecast would be a 30% increase over the previous year, even as container shipping enters its traditional slack season following the rush to export in the runup to the Lunar New Year writes Greg Knowler.
• Hapag-Lloyd expects to book 2024 revenue of $20.7 billion and a pre-tax profit of $2.8 billion, with earnings lifted by rising volumes and stable rate levels through much of the year. It will release its annual report on March 20 and show a 6.7% year-over-year increase in revenue generated by volume that rose 5% to 12.5 million TEUs and average rate levels of $1,492 per TEU, just $9 below 2023 writes Greg Knowler.
• China’s Transport Ministry extended Maersk’s domestic cabotage trial for an additional two years while also further liberalizing the cabotage rules. The pilot arrangement allows international carriers to transship domestic import and export cargoes at Shanghai’s Yangshan deepwater port from selected ports in northern China writes Keith Wallis.
• The first ships in Maersk and Hapag-Lloyd's new Gemini Cooperation set sail on Feb. 1, but it will be June before the hub-and-spoke network is fully phased in and all vessels are moving on Gemini schedules writes Greg Knowler.
• Engineering, procurement and construction (EPC) companies speaking to the Journal of Commerce say that tariffs that are enforced after project costs are finalized not only impact the bottom line, but in some cases destroy the viability of a project, hitting volumes in the breakbulk trade writes Carly Fields.

“We have suppliers in Mexico, Canada and all over so it is definitely affecting our choices and our selection,” Geanean Ordonez, project logistics manager/procurement at EPC Technip Energies, said on a Journal of Commerce webcast on Jan 23. She added that the enforcement of tariffs will “definitely affect how we purchase in the future.”

Inland

• Norfolk Southern Railway (NS) has introduced a mandatory appointment system for truckers to retrieve import containers at its Landers terminal in Chicago, marking the third location where the railroad has implemented such a program writes Ari Ashe.

SMC3 Jumpstart Conference

Bill Cassidy and I attended SMC3 Jumpstart on behalf of JOC last week. As noted on my own LinkedIn page, a lot of the discussions focused on AI, potential tariffs and possible impacts on the trucking market from the new administration.

Check out some of the stories that came out of the conference:

• JOC - US shippers urged to prepare now for upcoming LTL class changes, rate ‘resetting’, Bill Cassidy
• JOC - ‘Green shoots’ in US economy fuel optimism, but not exuberance, among LTL carriers, Bill Cassidy
• Trucking Dive - LTL freight classification changes: Upcoming dates to know, Colin Campbell
• Trucking Dive - Tech, culture determine success of LTL trucking M&A, Colin Campbell
• Trucking Dive - LTL business conditions trending positively for 2025: economist, Colin Campbell

Parcel/Last Mile

Last week UPS announced its Q4/YE 2024 earnings. While it reported favorable overall earnings, UPS announced, to no surprise, that it was in-housing its hybrid SurePost solution which the USPS handled the final mile. The other announcement was that UPS plans to reduce Amazon volumes 50% by June 2026. Amazon is UPS’ largest customer. As a result of these two announcements, UPS plans to ‘reimagine’ its US domestic network, which means closing some facilities and reducing workers to balance its network with anticipated lower volumes.

• I dusted off my Substack writing and wrote on UPS’ earnings etc.

For more on UPS’ earnings:

• Business Insider - UPS plunged after saying it would deliver fewer Amazon packages. Its CEO says it's about 'taking control of our destiny.'
• CNBC - UPS shares tank 14% after weak guidance, plan to slash Amazon deliveries by more than half

That's it for now. Thank you for reading! For readers interested in reading more Journal of Commerce stories, click here to subscribe. Enter code FFNL20 at checkout to receive a 20% discount on any subscription option. (Note that this is only for first-time subscribers or for upgrading a current subscription). What did I miss? Have a question? Let me know in the comments. I’ll be checking back throughout the week to answer questions, address comments, and share additional insights. In the meantime, here’s wishing everyone a good freight week ahead.

-Cathy