RAIL PROBLEMS SEE CONGESTION-EASING AT US PORTS HIT THE BUFFERS

The much anticipated surge of imports from China after Shanghai reopened did not materialise, demand has weakened and importers have shifted traffic to US gateways on the east and Gulf coasts.

Meanwhile, the port complex of Los Angeles and Long Beach, which accounts for the lion’s share of Asian import flows, continues to struggle with congestion.

“The west coast should be getting better, but it doesn’t because of lack of rail cars,” commented one forwarder. “It’s a real mess, and it’s going to continue.”

Port officials and forwarders are blaming the Class I railways for the ongoing obstruction.

Their rail heads and terminals in the interior – especially around the major rail hubs in Chicago, Dallas and Memphis – are choked with boxes. This has forced the carriers to halt the flow of containers from LA/Long Beach to several areas inland.

To ease the pressure on their inland hubs, Union Pacific and BNSF started metering traffic out of LA and Long Beach in late July, but these measures have raised concerns about full-blown stoppages, as happened last year.

In addition to causing longer delays, the metering has also forced forwarders to change routings, and they lost some business.

“We have also had to stop accepting bookings with some steamship lines to IPI points of Chicago, St Louis and Kansas City because of the metering,” reported Carmen Gerace, chief transportation officer of BDP International.

For their part, the railways blame cargo owners, accusing them of holding on to containers and chassis because of tight warehouse space, and not picking up cargo early. On 21 July, Union Pacific announced it was charging customers for late pick-ups.

“We’re using accessorial charges to encourage the right behaviour of our customers,” said CEO Lance Fritz.

Forwarders agreed a shortage of chassis had contributed to the rail carriers’ problems, but they pointed to the operators themselves as the architects of their own dilemma.

Service has been affected by an acute shortage of labour. In part, this is the result of lay-offs in the early days of the pandemic, but the carriers had already been slashing staff numbers aggressively before that in their pursuit of’ precision railroading’. Martin Oberman, CEO of the US Surface Transportation Board, accused them of operating with “bare bones” workforces after shedding 45,000 staff over six years.

To make matters worse, rail companies have been deadlocked in contract negotiations with labour unions. Intervention from the White House has averted industrial action for the time being, but railway employees have declined to work overtime, one forwarder noted.

“Combine this with precision railroading and you’ve got the mess we are in now,” he added.

Containers are sitting longer on the docks in California. According to the Pacific Merchant Shipping Association, box dwell times averaged 13.3 days in June, up from 11.3 days the previous month.

“IPI movements from LA/LB have increased in dwell time excessively over the past six months, with timelines averaging over 13 days. Our experience is that this dwell time is the minimum and can be as long as 20-30 days,” said Gerace. “We have had some recently with 50- to 60-day delays.”

Another forwarder had a container stuck on the dock for 42 days.

“The normal dwell time in LA/LB for rail cuts, I think, is now 9-10 days, but if you happen to get buried in a pile, you are screwed,” he said.

Bob Imbriani, executive VP international of Team Worldwide, said delays were not the only problem. Incidents of pilferage have increased as containers sit longer at terminals, he reported.

While most of the attention has been on clogged up import facilities, exporters are also facing challenges moving their cargo through California.

“This has been most pronounced out of the Midwest region,” explained Gerace.

BDP and Team have taken steps to diminish their exposure to inland rail moves from the west coast, said Imbriani.

“We terminate shipments at the port, transload them and move them by truck. We can’t rely on rail.”

This increases costs, which needs explaining to importers who watched ocean rates plummet and expected a corresponding drop in their bill – but it makes sure the freight gets to its destination, he added.

“Many of the solutions we have developed are able to alleviate delays, but there are additional costs associated with moving from an IPI delivery to alternate methods such as direct truck or transload,” said Gerace.

Diverting flows to ports on the east or Gulf coasts offers little benefit at this point. In expectation of a large wave of imports from Asia, and also out of concern that the contract negotiations between terminals and longshoremen might spark industrial action, shippers have shifted parts of their imports to the east, which has resulted in congested docks and vessels waiting for berth space.

While container dwell times have not risen significantly, wait times for ships to get to a berth in the eastern and southern US have increased, and congestion is causing delays in container pick-ups, Gerace observed. Most affected have been the ports of New York, Savannah and Houston, he added.

Meanwhile, California ports are scrambling to bring down the congestion on their patch. Gene Seroka, executive director of the port of Los Angeles, said the port would continue to focus on this issue. But nobody expects to see success soon.

“It takes a long time to flush out a terminal, especially if there aren’t enough railcars,” one forwarder commented.

Mandy Warren ( August 2022). RAIL PROBLEMS SEE "CONGESTION-EASING AT US PORTS HIT THE BUFFERS", VOICE OF THE INDEPENDENT, http://digital.worldlogisticsmedia.com/VOTI_128/issue128/index.html, 10/6/2022

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