The share of imports moving by rail from Los Angeles-Long Beach plummeted to an all-time low in the first four months of the year, as BNSF and Union Pacific railroads metered service from Southern California in order to relieve congestion at their inland hubs
Rail’s share of moving import containers from Los Angeles-Long Beach, which had dropped steadily from 67.9 percent in 2019 to 56.8 percent last year, took another deep plunge in January through April to 40.8 percent, according to the Alameda Corridor Transportation Authority (ACTA).
At the same time, the average number of intermodal trains serving the ports each day has also dropped steadily, from 33 in 2019 to 27 per day through June. Since the rail corridor opened 20 years ago, the number of trains transiting the corridor each day had been averaging about 40, according to ACTA.
The steep reduction in rail services to Los Angeles-Long Beach is having a knock-on impact at the terminal gates. The average truck turn time in July increased to 86 minutes from 82 minutes in both May and June, according to the Harbor Trucking Association (HTA). That is a warning sign that the congestion in rail operations is now affecting truck operations as the largest US port complex enters the peak-shipping season.
“It’s all correlated. The densification of rail containers on the terminal has a spill-over effect on the entire operation,” Noel Hacegaba, deputy executive director and COO at the Port of Long Beach, told JOC.com this week.
Rail container dwells at all-time high
Rail container dwell times in Los Angeles-Long Beach reached a record high of 13.3 days in June, up from the already high average of 11.3 days in May, according to the Pacific Merchant Shipping Association (PMSA). The ports for months now have told the railroads that the long-dwelling rail containers are a major source of congestion at their marine terminals, said Gene Seroka, executive director of the Port of Los Angeles.
The railroads say they have had to meter intermodal rail volumes from Southern California so as not to overwhelm their already congested ramps in Chicago and other inland hubs. The railroads say those hubs are congested because shippers are not retrieving their inbound containers in a timely manner, noted Seroka.
“Their message has been consistent,” he said. “Importers have to pick up their containers.”
IPI bookings whipsaw supply chains
Although the railroads are certainly contributing to congestion at the ports of Los Angeles and Long Beach, ocean carriers are equally to blame, said Larry Gross, president and founder of Gross Transportation Consulting and a JOC analyst. That’s because carriers since last summer have whipsawed trans-Pacific supply chains, first by encouraging retailers to make IPI — inland point intermodal — bookings, which sent intermodal volumes soaring, and then by discouraging IPI bookings in order to stop containers at the ports so they could be turned quickly and returned to Asia, Gross said.
In the Southern California-Chicago corridor, IPI shipments last August totaled about 128,000. Facing a shortage of containers in Asia, carriers suddenly decided to discourage IPI bookings, either by rejecting them outright or by pricing IPI bookings so high customers resorted to port-to-port bookings, Gross said.
By November, the IPI moves between Southern California and Chicago had dropped to 92,000 and remained in that range each month through February. However, the carriers by March decided to turn the spigot back on, and IPI moves in the Southern California-Chicago corridor rocketed to 113,000, and since then have been in the range of 120,000 to 131,000 each month through June, Gross said. The corridor has yet to recover from the supply chain disruptions caused by the fluctuations in IPI volumes.
“Now it’s up to the rest of the system to catch up, but there’s a limit to how much they can do,” Gross said. “I think the carriers bear a heavy responsibility for this.”
Threat of long-dwell fees
The options available to the ports and their supply chain stakeholders are likewise limited. The ports since last fall have threatened to impose stiff charges on long-dwelling containers that move by rail or by truck, but each week have delayed implementation of the fees. Dwell times for containers moved by truck have trended downward to 5.5 days in June, according to PMSA. The ports have considered delaying the implementation of the fees on local-delivery containers while implementing the fees on containers that leave the terminals by rail.
“We’ve had a spirited debate on this,” Seroka said. However, opponents of implementing a fee only on long-dwelling rail containers cite logistical challenges and possible legal complications, he said.
The ports are also encouraging the movement of rail containers to near-dock yards that have been set up for temporary storage until they can be delivered to the railroads. Pacific Terminal Services Company (PTSC), which has been storing empty and laden import and export containers for the past year at its near-dock yards in both ports, is now offering temporary storage for rail containers as well, said Sepehr Matinifar, vice president of commercial operations at PTSC.
Matinifar said PTSC set up its own truck brokerage operation and is now moving about 600 rail containers a week to its yards, which are running at between 80 and 90 percent utilization.
Seroka said the ports will continue to focus on their rail problems because IPI shipments can be just as easily moved through other gateways based on which ports have the most efficient operations.
“This is discretionary cargo,” he said. “It’s a big deal to us.”
Source: Journal Of Commerce
The share of imports moving by rail from Los Angeles-Long Beach plummeted to an all-time low in the first four months of the year, as BNSF and Union Pacific railroads metered service from Southern California in order to relieve congestion at their inland hubs
Rail’s share of moving import containers from Los Angeles-Long Beach, which had dropped steadily from 67.9 percent in 2019 to 56.8 percent last year, took another deep plunge in January through April to 40.8 percent, according to the Alameda Corridor Transportation Authority (ACTA).
At the same time, the average number of intermodal trains serving the ports each day has also dropped steadily, from 33 in 2019 to 27 per day through June. Since the rail corridor opened 20 years ago, the number of trains transiting the corridor each day had been averaging about 40, according to ACTA.
The steep reduction in rail services to Los Angeles-Long Beach is having a knock-on impact at the terminal gates. The average truck turn time in July increased to 86 minutes from 82 minutes in both May and June, according to the Harbor Trucking Association (HTA). That is a warning sign that the congestion in rail operations is now affecting truck operations as the largest US port complex enters the peak-shipping season.
“It’s all correlated. The densification of rail containers on the terminal has a spill-over effect on the entire operation,” Noel Hacegaba, deputy executive director and COO at the Port of Long Beach, told JOC.com this week.
Rail container dwells at all-time high
Rail container dwell times in Los Angeles-Long Beach reached a record high of 13.3 days in June, up from the already high average of 11.3 days in May, according to the Pacific Merchant Shipping Association (PMSA). The ports for months now have told the railroads that the long-dwelling rail containers are a major source of congestion at their marine terminals, said Gene Seroka, executive director of the Port of Los Angeles.
The railroads say they have had to meter intermodal rail volumes from Southern California so as not to overwhelm their already congested ramps in Chicago and other inland hubs. The railroads say those hubs are congested because shippers are not retrieving their inbound containers in a timely manner, noted Seroka.
“Their message has been consistent,” he said. “Importers have to pick up their containers.”
IPI bookings whipsaw supply chains
Although the railroads are certainly contributing to congestion at the ports of Los Angeles and Long Beach, ocean carriers are equally to blame, said Larry Gross, president and founder of Gross Transportation Consulting and a JOC analyst. That’s because carriers since last summer have whipsawed trans-Pacific supply chains, first by encouraging retailers to make IPI — inland point intermodal — bookings, which sent intermodal volumes soaring, and then by discouraging IPI bookings in order to stop containers at the ports so they could be turned quickly and returned to Asia, Gross said.
In the Southern California-Chicago corridor, IPI shipments last August totaled about 128,000. Facing a shortage of containers in Asia, carriers suddenly decided to discourage IPI bookings, either by rejecting them outright or by pricing IPI bookings so high customers resorted to port-to-port bookings, Gross said.
By November, the IPI moves between Southern California and Chicago had dropped to 92,000 and remained in that range each month through February. However, the carriers by March decided to turn the spigot back on, and IPI moves in the Southern California-Chicago corridor rocketed to 113,000, and since then have been in the range of 120,000 to 131,000 each month through June, Gross said. The corridor has yet to recover from the supply chain disruptions caused by the fluctuations in IPI volumes.
“Now it’s up to the rest of the system to catch up, but there’s a limit to how much they can do,” Gross said. “I think the carriers bear a heavy responsibility for this.”
Threat of long-dwell fees
The options available to the ports and their supply chain stakeholders are likewise limited. The ports since last fall have threatened to impose stiff charges on long-dwelling containers that move by rail or by truck, but each week have delayed implementation of the fees. Dwell times for containers moved by truck have trended downward to 5.5 days in June, according to PMSA. The ports have considered delaying the implementation of the fees on local-delivery containers while implementing the fees on containers that leave the terminals by rail.
“We’ve had a spirited debate on this,” Seroka said. However, opponents of implementing a fee only on long-dwelling rail containers cite logistical challenges and possible legal complications, he said.
The ports are also encouraging the movement of rail containers to near-dock yards that have been set up for temporary storage until they can be delivered to the railroads. Pacific Terminal Services Company (PTSC), which has been storing empty and laden import and export containers for the past year at its near-dock yards in both ports, is now offering temporary storage for rail containers as well, said Sepehr Matinifar, vice president of commercial operations at PTSC.
Matinifar said PTSC set up its own truck brokerage operation and is now moving about 600 rail containers a week to its yards, which are running at between 80 and 90 percent utilization.
Seroka said the ports will continue to focus on their rail problems because IPI shipments can be just as easily moved through other gateways based on which ports have the most efficient operations.
“This is discretionary cargo,” he said. “It’s a big deal to us.”
Source: Journal Of Commerce
