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FedEx names new chairman to replace founder Fred Smith

FedEx founder Fred Smith is pictured on a stairway by the door of a FedEx cargo jet.

The FedEx Corp. board of directors has elected R. Brad Martin as chairman to replace founder and executive chairman Frederick Smith, who died Saturday, and voted to reduce the size of the board to 12 members, the company said in a regulatory filing. 

Martin previously served as vice chairman. He leads the board’s audit and finance committees.

“The board, executive leadership team, and employees of FedEx extend their deepest condolences to Mr. Smith’s family expresses profound gratitude for his vision, leadership, and extraordinary contributions to FedEx, the country, and the world,” the report said.

Smith founded FedEx Express Corp. (NYSE: FDX) fifty-four years ago and revolutionized the parcel delivery business. He is considered a giant of the modern freight transportation industry, along with Malcolm McLean, who invented the ocean shipping container. 

Born in Mississippi and raised in Memphis, Tennessee, Smith entered Yale College in 1962 to pursue a degree in economics. While at Yale, he worked as a charter pilot and conceived the idea for an integrated air-to-ground system that would ensure overnight delivery, a concept that would eventually become Federal Express.

After graduating from Yale in 1966, he served four years in the United States Marine Corps, including two tours of duty in Vietnam where he served as a rifle platoon leader, a company commander, and aerial observer/tactical air controller.  He was decorated with the Silver Star, Bronze Star, and two Purple Hearts for his military service. He left the Marine Corps in 1970 as a captain.

Smith launched Federal Express in 1973 with a fleet of 14 Dassault Falcon jets and a vision to disrupt the transportation and logistics sector. He built the company into a multinational giant with $88 billion in annual revenue today. In 2022, he stepped down as CEO to focus on being executive chairman and global policy issues such as sustainability and trade facilitation.

“Frederick W. Smith pioneered express delivery and connected the world, shaping global commerce as we know it. His legacy of innovation, leadership, and philanthropy will continue to inspire future generations. I will miss not only his visionary leadership, but his trusted friendship and counsel,” CEO Raj Subramaniam said in a company blog post. 

Memorials can be made to the FedEx Founder’s Fund supporting volunteerism, community endeavors, and Veterans and their families, or the Marine Corps Scholarship Foundation providing scholarships for the children of military families attending post-high school, undergraduate, and career and technical education programs in all 50 states. In addition, memorials may be made to Le Bonheur Children’s Hospital and St. Jude Children’s Research Hospital, according to FedEx.

For more details about Smith’s life and career read FreightWaves’s obituary from Sunday morning. 

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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CPKC says service is on the mend in former KCS territory

Canadian Pacific Kansas City expects service to return to normal by late July in former Kansas City Southern territory that has experienced congestion, delays, and missed customer switches since a May 3 computer cutover.

“CPKC’s level of service performance on the legacy-KCS network since May 3, 2025 — as reflected in part in the [first mile/last mile] and manifest [on-time performance] metrics — does not measure up to CPKC’s standards for the quality of service it provides customers or the efficient operation of its network,” the railway said in a June 20 letter that was posted to the Surface Transportation Board website Monday.

The letter was filed in response to STB Chairman Patrick Fuchs’ request for information about the service problems, including their causes and how and when CPKC (NYSE: CP) intends to fix them.

“While it is too early to offer firm predictions about the timing of a full return to the high level of service performance that CPKC strives to provide customers, CPKC anticipates that service levels for the vast majority of legacy-KCS customers will be in the normal range in the second half of July,” the Calgary-based railway said.

Congestion-related performance metrics — including terminal dwell, average train speeds, and number of cars online — began trending in the right direction in late May and now show that operations have “turned the corner,” CPKC told the STB.

Service metrics, including manifest on-time performance and local switching, have shown steady improvement in recent weeks, CPKC said.

“CPKC anticipates that improvements for some customers may take somewhat more time, and that many customers will need additional time to work through backlogs of delayed inbound or outbound shipments, but CPKC’s progress to date suggests that the legacy-KCS network will be functioning well by late July and sooner in many areas,” the railway said.

The problems began immediately after CPKC shut down the KCS information technology system on May 3 and began using the legacy Canadian Pacific system in former KCS territory.

Among the problems:

  • Interchange information didn’t support processing of the cars without manual reworking of the data
  • The system had trouble maintaining accurate railcar inventories for cars placed or requested for pickup at customer facilities, particularly those with complex track layouts
  • Because of the car inventory issues, customers had trouble placing orders for empties or directing the movement of loaded cars

The data problems quickly snowballed into congestion and operational challenges.

“These issues in turn led to congestion at customer facilities, local serving yards, and classification yards across the legacy-KCS network as inbound railcars accumulated and outbound railcars could not be processed as efficiently as usual,” CPKC said. “That congestion was reflected in increased yard inventories, increased dwell times, reduced train speeds, and an increase in the locomotive and crew resources needed to move traffic over the legacy-KCS network.”

CPKC said it has taken “extraordinary efforts” to address and fix its service problems, including sending cross-functional “SWAT-like” teams to Beaumont and Port Arthur, Texas; Mossville/Lake Charles and Shreveport, La.; Jackson, Miss.; and Wylie, Texas.

“For example, CPKC’s Chief Operating Officer has been on location almost continuously at key points across the legacy-KCS network (including Shreveport Yard, legacy-KCS’s major switching facility; Jackson Yard, legacy-KCS’s second major switching facility; and Wylie Yard, KCS’s largest intermodal ramp). Two operating senior vice presidents similarly have spent several weeks as boots on the ground in the Southern Region supporting customers and front-line operating leaders,” CPKC said.

The teams worked with interchange partners to fix data issues for cars bound to the former KCS network, restored car data through an in-the-field census of cars located in yard, sidings, and customer facilities, and helped customers rebill cars and solve individual service problems.

They also helped local operating personnel understand how to use the new system to build work orders and assignments.

CPKC also adjusted its operations to ease the burden on congested terminals. Its yards at Nuevo Laredo, Mexico, and Davenport, Iowa, for example, built blocks that could bypass Shreveport Yard, the busiest on the former KCS system and a key hub for north-south and east-west traffic.

CPKC told the STB that it did not have underlying service problems before the computer system cutover, and emphasized that its legacy CP operations in the U.S. have continued to run smoothly. Separately, CPKC officials have said at recent investor conferences that operations remain normal in Canada and Mexico, as well.

The railway has not yet done a similar computer system cutover on former KCS de Mexico territory south of the border.

Subscribe to FreightWaves’ Rail e-newsletter and get the latest insights on rail freight right in your inbox.

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Update: What’s in the indictment? Charges against Texas trucking company owner quickly sealed

trucks on the highway

(The original article has been updated to include additional information. John Kingston contributed to the revised article).

WASHINGTON – A Texas trucking company owner was indicted by a federal grand jury earlier this month, with the indictment being almost immediately sealed and only a broad outline of the charges described in a Department of Justice press release.

The indictment against Shaquan Jermaine Jelks was entered into the docket for the federal district court for the Southern District of Texas on June 12, five days before Jelks was arrested. 

On the same day the indictment was handed down by a federal grand jury, the U.S. Attorney’s office asked that the indictment be sealed. That motion was granted the same day.

A press release issued Friday said the indictment was “unsealed” that day. However, the indictment sheet as of Monday afternoon, which could have greater details of what Jelks is charged with, could still not be accessed through the PACER federal court document system.

The press release does lay out a broad description of some of the charges in the indictment, without specifying the specific statutes that Jelks is charged with violating. A similar overview of the charges can be found in a decision Monday by a federal magistrate ordering that Jelks be held in detention. 

According to the Justice Department’s statement, Jelks “managed and controlled multiple commercial trucking companies after being ordered not to do so by a federal court and (FMCSA).”

Jelks, according to the Justice Department statement, “repeatedly lied to and obstructed FMCSA,” particularly in the wake of a crash that killed one of his company’s drivers in February 2022. 

And in what is a common theme in indictments involving trucking companies, Jelks is charged with diverting Paycheck Protection Program funds away from his companies and “relying on fraud to finance his illegal trucking companies.”

Violating Out of Service orders

According to the decision of federal magistrate Christina Bryan citing evidence in earlier hearings connected to the case, Jelks violated a court injunction and two Out of Service orders from FMCSA.

Jelks had been president of Adversity Transport Inc., according to a February 2022 imminent hazard operation out of service order issued by FMCSA against an affiliated trucking company, 4 Life Transport Corp.

“FMCSA contacted Adversity numerous times in late October and early November 2021 to conduct an investigation of its motor carrier operations,” the agency’s order states, and the carrier was subsequently placed out-of-service for failure to comply.

FMCSA noted in the order that between mid-November 2021 and early December 2021 at least six drivers for Adversity Transport began operating for 4 Life Transport, “a reincarnate or affiliate of Adversity operated to avoid FMCSA orders, statutory and regulatory requirements, enforcement actions, and/or negative compliance history.”

The order, which listed several safety violations against 4 Life Transport, stated that Adversity was served with an imminent hazard operations out-of-service order in January 2022 due to hours-of-service and vehicle maintenance violations.

It also noted that the truck and trailer involved in the February 2022 fatal crash cited in Jelks’ indictment had been operated by Adversity in December 2021.

A request Monday to keep Jelks in detention revealed more details on his interactions with FMCSA that were part of the reason he was indicted.

According to the Bryan order, Jelks “(continued) to operate commercial motor vehicles after his operations had been declared an imminent hazard.”

Judge Bryan said Jelks submitted false documents to various government agencies “on multiple occasions.”

“Mr. Jelks’ own conduct–the flagrant violation of an injunction from this Court and of two Imminent Hazard Operations from the DOT–demonstrates that there are no conditions this Court can set to address the danger to the community with any expectation that Mr. Jelks will follow those conditions,” Judge Bryan wrote.

The government’s request for the indictment to be sealed was based on the interim period between the grand jury action and Jelks’ actual request, which took place June 17.

Prior murder conviction

The request reveals that Jelks already has been convicted of murder in 1997. It also cited concerns that he would intimidate his wife, as Jelks had indicated to her that he was concerned she was cooperating with the ongoing grand jury investigation that was also cited by the government as a reason for the sealing of the indictment. Joseph Harris, special agent-in-charge of the U.S. Department of Transportation’s Office of Inspector General’s Southern Region, added that “people have every right to expect that trucking companies follow the highest safety standards when using our public roads. Today’s announcement shows our continued commitment to holding commercial operators accountable – especially those who put profits ahead of public safety by disregarding key DOT regulations.”

Click for more FreightWaves articles by John Gallagher.

Feds set $10M to study health effects of East Palestine rail disaster

The National Institutes of Health (NIH) announced a five-year, $10 million research initiative aimed at understanding and addressing the long-term health effects of the 2023 railroad derailment in East Palestine, Ohio.

The agency said it’s the first large-scale coordinated federal program to deliver science-backed answers to the long-standing concerns of East Palestine residents.

In February 2023, a Norfolk Southern (NYSE: NSC) freight train carrying hazardous chemicals derailed and caught fire. The National Transportation Safety Board later criticized a decision by responders to intentionally burn off some of the chemicals.

The multi-disciplinary, community-focused series of studies that will focus on:

  • Longitudinal epidemiological research to understand the health impacts of exposures on short- and long-term health outcomes including relevant biological markers of risk.
  • Public health tracking and surveillance of the community’s health conditions to support health care decisions and preventive measures.
  • Extensive, well-coordinated communications among researchers, study participants, community stakeholders, health care providers, government officials, and others to establish a comprehensive approach to address the affected communities’ health concerns.

The program, which will focus heavily on public health tracking and surveillance, will ensure that the community receives adequate healthcare decisions and preventive measures based on empirical data. The studies will involve longitudinal epidemiological research to recognize the short- and long-term health effects of chemical exposure. There is growing concern about potential effects on maternal and child health, as well as psychological, immunological, respiratory, and cardiovascular conditions.

The research program, as announced, anticipates receiving and evaluating research proposals by July 21, with projects expected to commence in the fall. The study promises to explore a variety of research methodologies and community activities to fully understand the health impacts of the disaster.

Subscribe to FreightWaves’ Rail e-newsletter and get the latest insights on rail freight right in your inbox.

Find more articles by Stuart Chirls here.

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Qantas Freight adds freighter connections to Shanghai, Bangkok

A red-tailed Qantas Freight cargo jet on the runway.

The air logistics division of Qantas will operate a non-stop freighter service from Australia to Shanghai, China, with its own metal for the first time, starting on Thursday. 

Qantas Freight said it will deploy an Airbus A330-200 converted freighter twice per week between Sydney and Shanghai to meet shipping demand for direct service. Previous service between the cities has utilized two Boeing 747-400 cargo jets under an operating lease with U.S.-based Atlas Air. Non-China loads will be transferred to Atlas Air in Shanghai for onward service to Chicago.

Qantas Freight has 10 aircraft in its fleet – six Airbus A321 (narrowbody) converted freighters, two A330-200s and the two 747s flown by Atlas Air. Five of the planes are used for international service.

The airline in late May also added a second weekly Asia-U.S. service via Bangkok (Sydney-Bangkok-Shanghai-New York JFK via Anchorage with return stops in Los Angeles, Honolulu) and (Sydney-Bangkok-Shanghai-Anchorage-Dallas-JFK-Chicago-Honolulu-Melbourne-Sydney) flown by Atlas Air. Stopping in Bangkok adds extra capacity for shippers out of Thailand. 

“Global freight demand to and from Asia continues to grow and we’re launching this additional capacity to support our customers’ fast-moving critical cargo and e-commerce shipments from Bangkok and Shanghai,” said Igor Kwiatkowski, executive manager, Qantas Freight, in a press release. 

“The new Shanghai services will mean Qantas Freight will offer more direct freighter services between Australia and China than ever before, making it easier and more flexible for customers to book capacity to and from China’s busiest cargo port, along with more tranship options to key US destinations,” he added. The Shanghai schedule is timed to allow exporters across the country to get their goods to Sydney and connect with the Shanghai flight.

Qantas Freight A330s currently operate between Melbourne, Sydney and Perth in Australia and Hong Kong, according to the company’s posted schedule..

Qantas’ cargo division said it has recently upgraded online booking capabilities on its website to allow faster booking confirmations, specialized shipments, improved tracking and real-time truck booking options for UK and U.S.-origin shipments. In addition to enhancing its own booking engine, Qantas Freight is expanding its presence on neutral air cargo marketplaces. Customers can now access Qantas and Jetstar capacity to Australia from the U.S., U.K. and South Africa on CargoAi’s neutral platform. Last year, Qantas joined cargo.one and WebCargo by Freightos. 

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

Australian freight sector welcomes approval of third runway in Melbourne

Nominate your company for AI Excellence in Supply Chain

In an era rapidly transformed by breakthrough technologies, the integration of artificial intelligence (AI) into the supply chain stands as a significant frontier. As industries increasingly embrace digital transformation, AI, machine learning (ML), and large language models (LLMs) are unlocking unprecedented efficiencies, paving the way for smarter and more resilient supply chains. This July, industry leaders and innovators will convene at the Supply Chain AI Symposium in Washington, DC, at the iconic International Spy Museum to celebrate those at the forefront of this technological revolution.

AI technologies are reshaping the logistics and supply chain landscape by providing transformative solutions that streamline operations, enhance visibility, and drive sustainability. From predictive analytics that anticipate market demands to autonomous logistics that optimize delivery routes, the integration of AI into supply chains offers substantial benefits. These advancements allow for real-time decision-making, minimize waste, and pave the way for more adaptive and responsive supply chain networks. The power of AI lies not only in its ability to automate mundane tasks but also in its capacity to generate insights that lead to smarter business strategies.

To honor these transformative innovations, FreightWaves is excited to announce the AI Excellence in Supply Chain Award. This prestigious award is designed to recognize companies that are pioneering the use of AI in logistics and transportation, driving efficiency and innovation. Whether it’s through innovative demand forecasting or real-time visibility tools, these companies are setting new benchmarks for excellence and sustainability in the industry.

The award criteria emphasize groundbreaking innovation, effectiveness in improving supply chain efficiency or resilience, and significant impact on the industry. Eligible candidates include companies offering AI-driven solutions for demand forecasting, route optimization, real-time visibility, and other essential supply chain functions. The recognition aims to highlight those who have made a measurable difference in shaping the future of logistics.

The nomination process is simple and open to all companies leading the charge with AI-driven supply chain solutions. Participants can nominate their organization or recommend a peer company known for its impactful contributions to the industry. The deadline for nomination submissions is firmly set for 5:00 PM ET on July 18, 2025. Winners will be announced live at the much-awaited event, providing awardees with unparalleled visibility among industry leaders and AI experts.

The Supply Chain AI Symposium itself will be a hub of innovation and inspiration, offering a platform for networking and exchanging ideas that propel the industry forward. Attendees will explore the potential of AI in creating smarter supply chains and envision a future where logistics operations are seamlessly integrated and highly efficient.

This award is more than just a recognition; it is an affirmation of the collective vision of those who strive to redefine possibilities within the logistics sector. In a world where consumer expectations and regulatory landscapes continue to evolve, AI in supply chains is not merely a competitive advantage—it is a necessity for those looking to thrive.

As the industry gears up for the future, FreightWaves invites all visionaries and trailblazers to join in this celebration of AI excellence. It’s an opportunity to applaud the innovators who are not just keeping pace with change but driving it. With such dynamic technological advances, the Supply Chain AI Symposium aims to bring together the best minds to discuss, debate, and define the future of AI in supply chains.

So mark your calendars for July 30, 2025, and prepare to witness how AI is transforming logistics at the International Spy Museum—a fitting backdrop for the unveiling of cutting-edge innovations. Don’t miss the chance to be part of this landmark event where the future of the supply chain takes center stage.

Tive: revolutionizing fraud prevention through real-time visibility

Recognized as a winner of the 2025 FreightWaves Fraud Fighter Awards, Tive has established itself as a leader in combating freight fraud through advanced supply chain visibility solutions. The company’s approach centers on a critical factor that they identify as the greatest threat in freight fraud today: awareness.

“In a word, awareness,” explained Tive. “Awareness of who you are doing business with and who is moving your freight. Awareness of where your freight is located while in transit. Awareness of the condition of freight while it’s in transit. And awareness of when and where container doors are being opened. Without awareness of the comings and goings of your cargo, you are merely guessing—and can only fix problems after they occur.”

Tive’s fraud prevention strategies have evolved significantly over time, beginning with real-time shipment location tracking before expanding to include comprehensive conditions data such as light, temperature, humidity, tilt, and shock. The company later introduced custom geofencing for location-based alerting and logic for alerts when cargo experiences prolonged stops. Their most recent innovation, Tive Security Seals, represents a significant advancement in cargo protection.

These tamper-evident cable locks utilize Bluetooth technology to secure containers and trailers through real-time threat detection and instant location alerts. Additionally, Tive is implementing machine learning for multi-sensor alerts, further enhancing their security capabilities.

When asked about the most significant technological change in combatting fraud, Tive points to “enhanced tracking via IOT devices—coupled with enhanced and improved carrier vetting.” Their industry-leading Solo 5G trackers use the latest global cellular, WiFi, and GPS technology to report real-time, rich sensor data to the Tive platform, providing complete visibility into shipments and sending alerts when issues arise.

Tive emphasizes that successful fraud prevention requires a comprehensive approach. “A multi-layered approach is best. Carrier vetting is helpful, but if that’s all that is done, you will still have weaknesses. The same can be said for using only IOT trackers. They work well and are essential—but without carrier vetting and strong SOPs, there will still be weaknesses in the overall solution.”

The effectiveness of Tive’s solutions is best illustrated through real-world success stories. Potomac Metals Inc. (PMI), a privately-held scrap metal recycling company founded in 1996, experienced the recovery of a stolen shipment worth $175,000 thanks to Tive’s technology. In mid-October 2024, PMI was able to monitor a stolen full shipment of copper as it traveled 400 miles past its intended destination, leading to the complete recovery of the load within hours.

“We would be totally out of luck without Tive,” says Sarah Zwilsky, President of PMI. The company initially planned to use Tive only for their highest-value item—copper wire—but quickly expanded its use to their five most expensive products after seeing the benefits. “Tive has a great ROI. At PMI, we track really valuable products. If a load doesn’t get to its delivery location, we’re held in limbo waiting for it to arrive—and before Tive, we didn’t know where shipments were. Tive has really legitimized our business.”

Similarly, Vianney, a Mexico-based retailer, successfully recovered almost all merchandise involved in a theft in February 2024. The cargo had been stolen on one of the routes with the highest theft rates and ended up at a Vianney customer site. “Armed with a search warrant, we conducted a raid on that Vianney customer—and never worked with them again,” stated the Head of Asset Security. “It’s one thing to think you know where your merchandise is, but with Tive, we have total certainty. This has helped us a lot because our sales team can tell our clients: ‘When you work with Vianney, everything is done legally.’”

Another compelling example comes from Dulces de la Rosa, a Mexico-based candy company that faced a cargo theft incident near Mexico City in 2024. According to their head of security, “Once we realized the truck had been taken, we were able to watch our shipment move through the city within the Tive platform.” This visibility enabled them to direct police to the exact location, resulting in the recovery of all stolen goods. “Tive is our backup plan in case something happens. When a Tive tracker has been on a shipment in which something has gone wrong, we have achieved at least a partial recovery.”

Looking toward the future, Tive believes that evolving technology will strengthen business relationships, with these improved connections preventing much potential fraud. When asked what the industry can do to better combat fraud, Tive emphasizes communication: “Only when the good guys are working together and sharing information about what is happening, what is working, and what isn’t working will the industry start to thwart thieves in their tracks.”

Tive’s strategic approach draws inspiration from beyond the freight industry. “As Sun Tzu once said, ‘Strategy without tactics is the slowest way to victory, and tactics without strategy is the noise before defeat’. At Tive, we feel as though many companies are deploying fraud prevention tactics without first building an overarching strategy—like a game of whack-a-mole. Building a detailed and comprehensive strategy first—and then finding the tech and tactics that best support it—is the most successful path forward.”

For companies looking to train their employees on fraud prevention, Tive recommends seeking assistance from expert organizations. “There are organizations full of experts that want to help. TAPA is an example of one of these organizations—and they have standards that can be used for training and best practices.”

Through its innovative approach to supply chain visibility and security, Tive continues to lead the fight against freight fraud, providing companies with the tools and strategies needed to protect their valuable shipments in an increasingly complex global logistics environment.

Update: oil prices fall back after short-lived surge in early trading

The price of oil was essentially flat Monday morning U.S. time after having opened higher Sunday evening U.S. time following the military strike on Iran by the Trump administration.

Even the initial increase in price was considered somewhat underwhelming compared to the more apocalyptic predictions heard prior to the attack.

However, from the perspective of the trucking industry, it was the continued strength of diesel compared to crude and gasoline that might get the greatest amount of attention.

At approximately 7:05 p.m. EDT, about an hour after trading began on various exchanges, global crude benchmark Brent was up $1.88/barrel to $78.89/b, a gain of 2.44%. The U.S benchmark crude grade, West Texas Intermediate, was up 2.52% to $75.70/b, a gain of $1.86/b. RBOB gasoline, which is a semi-finished gasoline product that serves as the trading platform for finished gasoline, was up 2.19% to $2.3806/gallon, an increase of 5.11 cts/g. (RBOB is essentially gasoline without the added ethanol).

But it was ultra low sulfur diesel (ULSD) that showed the largest increase Sunday evening. It rose 3.67% to $2.6352/g, an increase of 9.34 cts/g.

In a remarkable reversal, by 9:30 a.m. EDT, oil prices were flat to down from the Friday settlement on the CME commodity exchange.

Just before 9:30, ULSD was down about 25 basis points, or .09%. WTI was up .08% and Brent was up a little less than 0.2%.

Later news that two oil tankers that had at first done a U-turn to avoid going through the Strait and then reversed that decision and went through anyway helped calm markets.

In an interview on Bloomberg Television and reported by Bloomberg, Bob McNally, founder of Rapidan Energy Advisers LLC and a long-time Washington energy official, said earlier gains in the market already had moved the price to a level that reflected possible turmoil.

“We are up $10 a barrel since the war started, now a little more, and so I think there is an appropriate amount of risk in the market,” he said. “Traders are holding their breath, waiting to see if Israel or Iran expand this conflict beyond military and political targets into traded energy. “So far, no one has pulled that trigger , and if they don’t, I can see the price reversing.”

If ULSD settled at that level Monday afternoon in the U.S., it would be the highest price since a settlement of $2.6513/g on April 16, 2024.

The most bullish scenario for the oil market in the weeks leading up to the attack by the U.S. on Iranian nuclear facilities and now in the wake of an actual one is the fate of the Strait of Hormuz, which is the gateway to the Persian Gulf and the route of oil exports from numerous countries, including Saudi Arabia, Kuwait, Iraq and Iran.

A Reuters report from 2023, quoting various sources, said about 20% of the world’s roughly 103 million b/d of consumption passes through the Strait of Hormuz every day. There are alternative export routes via pipeline for some of the countries, but it is unclear how much the infrastructure ramping up to 100% of capacity can replace normal export levels through the Strait. 

The Strait of Hormuz is not international waters. Part of it is Iranian territorial waters; the other portion is the territorial waters of Oman. 

The Iranian Parliament voted over the weekend to close the Strait of Hormuz, though several news reports noted that the decision whether to implement such a radical step would be up to the country’s senior leadership.

Secretary of State Marco Rubio, in an interview with Fox News Sunday, called upon China to dissuade Iran from pursuing that policy. China is easily the largest customer for Iranian crude, and the supply line for it comes out of Iran via the Strait and on to China. 

“I encourage the Chinese government in Beijing to call them about that, because they heavily depend on the Straits of Hormuz for their oil,” Rubio said, according to several reports of his interview.

It was noted by other analysts that closing the Strait of Hormuz would have an outsized impact on Iranian exports, cutting off its most important revenue source.

Meanwhile, the soaring spread between crude and diesel is a relatively new phenomenon. 

On a straight comparison of front month ULSD to front month Brent, that spread Sunday evening, using the 7:05 pm prices, translated to about 75 cts/gallon. It is the widest spread since February 2024. A month ago it was about 56 cts/g.

In its monthly report on the market for middle distillates including diesel, published just before the actual attack, the oil market analytics research firm of Energy Aspects spelled out some of the reasons for the continuing strength of diesel relative to crude.

“We see increasing risks to middle distillates supply due to the escalation of the Israel–Iran conflict after last Friday’s attacks,” EA said. 

As far as the two Middle East combatants, the EA report said all Israeli refiners are “non-operational” after attacks by Iran. The country has a relatively small refining capacity, but it is a net exporter of diesel, EA said. That means it presumably will need to turn to imports to replace the lost capacity.

As far as Iran, EA said, it produces about 700,000 b/d of diesel. It also is a net exporter of diesel, “but could need to import in case of any supply disruptions,” it said.

EA’s report also contained a chart showing a relatively tight level of diesel inventories in Europe. (Figures are in millions of barrels).

U.S. inventories also have been well below the five and 10-year average for the second week in June, but with diesel demand down as well, the amount of “days cover”–the size of the stocks measured as how long on their own they could cover consumption–has been climbing in recent weeks. 

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Tanker rates surge, Maersk still sailing through Strait of Hormuz

Spot rates for the largest crude oil tankers from the Persian Gulf to China have surged 50% in the past week on heightened Middle East tensions, but major container lines continue sailings through the region despite threats by Iran to close the vital Strait of Hormuz.

Rates for ultra large crude carriers (VLCCs) on the Middle East Gulf to the Far East were climbing even before the United States bombed Iran’s nuclear facilities on June 21.

The rate for a 270,000-metric ton tanker surged 22 points, or about 50%, on the Worldscale (WS) global index to about 75, on a baseline of 100. This translates to a roundtrip time charter equivalent (TCE) of more than $57,000 per day, according to published reports. 

That rate was approximately $21,000 per day as of June 11.

Crude oil futures reached $76.42 Sunday, up from the previous close of $73.84. 

The Iranian parliament on Sunday approved a measure to close the Strait of Hormuz, the narrow gateway from the Gulf to the Arabian Sea and worldwide shipping lanes. Approximately 17 million barrels per day — or one in four barrels of the world’s production — pass through the waterway each year, according to the Strauss Center for International Security and Law at the University of Texas.

On Sunday U.S. Secretary of State Marco Rubio called on China, the biggest customer for Iranian oil, to prevent Tehran from closing the strait.

Iran’s security regime would have to sign off on a closure, which last occurred in 1984.

Gulf nations account for 2-3% of annual global container volumes, and shipping lines are tracking developments.

“We continue to monitor the situation very closely, especially considering the U.S. involvement in the conflict,” Maersk of Denmark said in an advisory. “At the moment sailing through the Straight [sic] of Hormuz continues, but we are ready to re-evaluate this based on information available. Equally, we will continuously monitor the security risk to our specific vessels in the region and are ready to take operational actions as needed.”

French-based CMA CGM said “shipping activities are proceeding as normal in the area, and that our operations and logistics chains remain unchanged. We continue to ensure full service coverage across all routes and ports of call.”

Find more articles by Stuart Chirls here.

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Borderlands Mexico: Supply chain firms invest in new cross-border facilities

Borderlands Mexico is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Supply chain invest in new cross-border facilities; Japanese industrial supplier investing $5M in Mexico expansion; and Benchmark Electronics opens manufacturing facility in Guadalajara, Mexico.

Supply chain firms invest in new cross-border facilities

With Mexico as the No. 1 trade partner of the U.S., global logistics firms and businesses continue to invest in supply chain facilities to accelerate cross-border commerce.

Developments from Evans Transportation, Geodis Logistics, DP World and We Store Frozen reflect growing cross-border trade volumes and Mexico’s expanding role in regional supply chains.

Delafield, Wisconsin-based Evans Transportation opened its first office in Laredo, Texas, on Wednesday.

The Laredo location functions as a hub for cross-border operations, enabling Evans Transportation to provide logistics solutions such as dry van, flatbed, oversize freight, intermodal, transloading, warehousing and supply chain management.

Evans Transportation is a full-service, third-party provider of custom logistics solutions for a range of North American shippers.

“We are excited to expand our footprint in Laredo — the largest port in North America,” Charles Miller, COO of Evans Transportation, said in a news release. “This new office underscores our commitment to delivering exceptional service to our clients and their suppliers by providing specialized support for Mexico and cross-border transportation.”

Dubai-based DP World recently opened a freight forwarding office in Mexico City. The office aims to enhance DP World’s ability to deliver integrated, end-to-end logistics solutions across North and Central America.

“Mexico is one of the most important growth markets for DP World in North America,” Terry Donohoe, senior vice president of freight forwarding in the Americas at DP World, said in a news release. “Our new Mexico City office strengthens our regional network and positions us to support cross-border supply chains with greater efficiency and scale.”

DP World is a global logistics company headquartered specializing in port operations, maritime services and free trade zones.

DP World’s Mexico City location will serve as the company’s central freight forwarding hub in the country, supported by satellite offices in Guadalajara and Monterrey. These locations are part of a broader network across major industrial cities in Mexico, including Querétaro, Juárez, San Luis Potosí and Puebla.

French transport and logistics company Geodis Logistics recently opened a new office in Guadalajara, Mexico, creating 442 jobs.

“The unveiling of our new office in Guadalajara marks a significant milestone for our operations in the country, where we have had a presence for nearly 20 years,” said Miguel Munoz, managing director at Geodis in Mexico, said in a news release. “Not only are we able to expand our growing freight forwarding line of business in the region with this new location, but we are adding new logistics solutions to our product portfolio to best support our customers.”

The 30,021-square-foot facility brings Geodis’ total footprint in Mexico to 14 buildings and more than 1.6 million-square-feet. 

Houston-based We Store Frozen recently began construction of a $40 million cold storage facility in Laredo. 

The 180,000-square-foot structure will feature 100,000 square feet of frozen storage space, specifically designed to support large-scale imports of frozen produce and proteins from Mexico and Latin America, according to the company.

“As consumer demand for frozen food continues to grow — particularly imports flowing through Texas border hubs — We Store Frozen’s expanded footprint aims to capture a greater share of that volume,” officials for We Store Frozen said in a statement. “The company is investing heavily in infrastructure and logistics to support national and international growth.”

Japanese industrial supplier investing $5M in Mexico expansion

Japan-based Tokai Kogyo said it is investing to expand its production lines in Aguascalientes, Mexico.

The expansion will take place at Tokai Kogyo’s plant located in the Siglo XXI Industrial Park, where the company has operated since 2014.

The company produces rubber and resin automotive components at the factory in Aguascalientes.

Nagoya, Japan-based Tokai Kogyo was founded in 1970. The global automotive supplier has factories in the U.S., Mexico and Japan.

Benchmark Electronics opens manufacturing facility in Guadalajara, Mexico

Tempe, Arizona-based Benchmark Electronics Inc. (NYSE: BHE) announced the opening of a manufacturing facility in Guadalajara, Mexico.

The 321,000-square-foot facility expands Benchmark’s manufacturing footprint in the region by 50%, according to the company.

“This new facility increases our capabilities in the region with an optimized space to serve complex and highly regulated industries,” Jeff Benck, president and CEO of Benchmark, said in a news release. “This expansion will allow us to scale with new and existing customers,”

Founded in 1979, Benchmark Electronics provides contract manufacturing services for global corporations.