Freight Forward: Paying for Decarbonization

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 parcel last-mile queries.

• The COP 28 United Nations Climate Change Conference begins this week and will bring with it an inevitable reflection on what remains a very uncertain pathway to decarbonization within container shipping supply chains, writes Peter Tirschwell in his latest column. Shipowners have ordered 125 vessels able to run on methanol upon delivery, according to S&P Global Market Intelligence, despite a lack of available fuel supply. And a few beneficial cargo owners (BCOs) are taking the lead. But “the willingness to pay is not there yet,” Hapag-Lloyd CEO Rolf Habben Jansen said during a recent panel discussion hosted by the carrier, referring to its ShipGreen product that offers shippers the ability to reduce CO2 emissions associated with their cargo transport by up to 100%. For additional thoughts, check out Peter's recent LinkedIn post.
• Mark Szakonyi's column is about the drought conditions impacting the Panama Canal. The soonest the Panama Canal Authority says it could see significant relief is 2028, and that’s if the government of Panama course-corrects after years of underinvestment and supports $2 billion in investment to build a new reservoir and more pipelines, writes Mark. Concerns over the restrictions have resulted in carriers changing course -ONE considering other routings via the Suez Canal. To avoid the draft limits and get US imports from Asia to the Midwest, Zim Integrated Shipping Services added a call at the Port of Lázaro Cardenas in Mexico, while CMA CGM has been making more ad-hoc calls to the Pacific Coast port.
• A shortage of containers in the nation’s interior amid a decline in containerized imports is beginning to compromise the ability of US agricultural exporters to ship their commodities to markets in Asia and Europe, writes Bill Mongelluzzo. A spike in blank sailings from Asia to the US West and East coasts is exacerbating the equipment shortage by disrupting shipping schedules.

• The UK’s competition regulator has proposed joining its European Commission counterpart in allowing container shipping’s antitrust immunity to lapse when the regulation expires next April, writes Greg Knowler. “The CMA’s provisional view is that that the retained Consortia Block Exemption Regulation (CBER) should lapse on its expiry.?Expansions at Portsdate of 25 April 2024, without replacement,” the agency said in a statement

Expansions at Ports

• Teri Errico Griffis writes that developers have broken ground on a 10 million-square-foot logistics center near the Port of Savannah that will offer cross-dock and CSX rail services. The Central Point Logistics Center at Savannah — a 467-acre industrial space to be developed by Capital Development Partners — will offer 10,080 TEUs of container space for customers of the port to store their cargo for import or export distribution.
• Michael Angell writes that a new resin packaging capacity is planned near the Port of Virginia. The capacity planned near the port seeks to handle plastics production from Shell’s new petrochemicals plant in Pennsylvania. Virginia Gov. Glenn Youngkin said in a statement this week that resin packager Katoen Natie will invest $59.9 million in expanding its presence in Norfolk. The investment includes a 450,000-square-foot warehouse, rail yard, and new spur.

Inland

Trucking

• US less-than-truckload (LTL) carrier Estes Express Lines plans to invest even more in technology after suffering a cyberattack last month, writes Bill Cassidy. Estes had already been increasing spending on technology, its LTL terminal network, and its forwarding business before the cyberattack.

Chart of the Week

Intermodal

Railroads are creating new services in international and domestic intermodal, but also finding other ways to help IMCs convert highway freight, writes Ari Ashe. For example, new partnerships have popped up to convert highway freight in Mexico, and developments for international intermodal this year, such as CN, reaching a deal with shippers using Gulfport to launch a trial intermodal service to rail reefer containers to Chicago. But, none of these new services will work if the service is poor. Railroads have acknowledged that one reason they’ve lost market share is chronic service disruptions, resulting in shippers having little confidence in the product.

Parcels

Amazon has surpassed UPS and FedEx in terms of volumes, according to a WSJ story. Before Thanksgiving, Amazon had already delivered more than 4.8 billion packages in the U.S. For the first 9 months of the year, UPS had delivered 3.4 billion packages. Keep in mind that Amazon represents 11% of UPS' total revenue. But do volumes still matter? FedEx and UPS will say no, as both switched their focus on 'profitable' volumes a few years ago.

M&A

Speaking of volumes, in my latest ACN column, I wrote on Cryoport's recent acquisitions to expand its temperature-controlled supply chain capabilities as it faces growing competition from other specialized providers, the express market, and freight forwarders. Within the past month, the company acquired German technology company Tec4med Lifescience and Bluebird Express, a domestic and international transportation service provider based in New York. “There is no other organization in the life sciences with the breadth of capabilities Cryoport has in providing robust, dependable, end-to-end supply chain solutions,” Cryoport Chief Executive Jerrell Shelton told analysts during the company’s third-quarter earnings call on Nov 8. “Today, CRYOPDP is the world’s third-largest specialty couriers serving the life sciences, covering over 220 countries and territories.”

That’s it for now. Please be sure to hit the subscribe button to receive the latest updates.

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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 and, for US readers.

(Photo source: Photo 244563457 | Decarbonization ? Paradee Paradee | Dreamstime.com)

- Cathy