Port of Los Angeles freight rail congestion hits two-year high ahead of holidays | Real Time Headlines

West Coast ports have seen record import volumes over the past few months due to recent strike diversions along the East Coast and Gulf Coast and ongoing Red Sea issues, leading to rail congestion and mountains of holiday merchandise and everyday supplies.

Almost half of the containers shipped by freight rail from the Port of Los Angeles wait more than nine days to leave the port and onto the rail.

Before August and September Container surgeThe average rail dwell time, or how long a container stays at the port, in the San Pedro Basin, which includes the Port of Los Angeles and Long Beach, is four days.

In September, the Port of Los Angeles moved a total of 954,706 twenty-foot equivalent units (TEU), making it the best September ever. At the port’s monthly freight briefing on Friday, Executive Director Gene Seroka told CNBC that 20,000 rail containers are currently parked at the port awaiting shipment and that he is discussing increasing dwell times with railroads daily.

But he stressed that rail congestion would not cause any other problems at the port as far as ship and trucking operations are concerned. “This will not affect port operations,” Seroka said. “We want to make sure we improve all port operations. Rail remains our focus.”

Seroka said he is monitoring three key factors related to future container growth and the port’s ability to move all cargo efficiently: the early days of the Lunar New Year, the U.S. presidential election and the strength of the economy, which currently looks strong. Quantity data.

“October will be another strong month,” Seroka said. “We’re not seeing signs of a sharp decline. We’re looking at the 800,000 TEU range. We have an early Lunar New Year. Given the tariffs, we may see an increase in cargoes earlier to avoid those additional costs depending on the election of the president. As a result, jobless claims fell.

Republican presidential candidate and former President Trump continues Positive talk about new trade tariffs If he wins the election.

Executive Director Mario Cordero told CNBC that at the Port of Long Beach, containers are staying on the rails for seven days, but the port is not experiencing congestion.

“Given the record number of TEUs that have passed through (the Port of Long Beach) in the past three months, the current rail shutdown is not an imminent issue,” Cordero said. “The Port of Long Beach is not experiencing any congestion or bottlenecks and our operations are operating smoothly. Given our current capacity, we are well-positioned to continue receiving record volumes of cargo.”

Cordero said terminal rail traffic increased by about 26%.

In September, the Port of Long Beach moved 829,499 TEUs. The port’s cargo volume increased year-over-year for the fourth consecutive month in September, with holiday-related products driving growth.

Related retail and chemical companies

Sales are expected to be strong for the rest of the year, National Retail Federation CEO Matt Shea told reporters at a holiday sales forecast briefing this week. “(We are) very pleased with where retailers are in their inventory cycle and meeting consumer demand,” he said.

National Retail Federation Forecast Winter holiday consumption Growth of 2.5% to 3.5% in 2023 is in line with annual sales forecasts, and holiday spending in November and December totaled $989 billion, slightly above last year’s levels. Amazon recently announced The company plans to hire an additional 250,000 workers during the holidays, the same level of seasonal hiring last year.

Panju.com, a global data company that tracks bills of lading (digital receipts for cargo containers), said that from September 1 to October 14, $231 million worth of products were designated as “Christmas” at the Port of Los Angeles, 7,800 of which Ten thousand dollars is designated as “Christmas.” Items include home decor, lights, trees, candles, menorahs, nutcrackers and garlands. Some of the companies listed under these categories include Home Depot, Target and Walmart.

Holiday items aren’t the only products in the containers. Also included were sweaters, home improvement products destined for Kohl’s and 92 containers of 1,840 packages of solar panels for China’s BYD.

Eric Baier, chief executive of the Chemical Distribution Alliance, said the ports of Los Angeles and Long Beach are important ports for critical chemicals, including lemons, sulfuric acid and ascorbic acid, that come from China every day.

“These chemicals are key ingredients in products ranging from household cleaning products to vitamins to soft drinks and energy sports drinks. Due to strikes at East Coast ports, increased cargo volumes entering these ports and increased shipping delays have forced ACD members to Reroute cargo to other ports on the West Coast and southern United States,” Beyer said.

Jon Gold, vice president of supply chain and customs policy at the National Retail Federation, told CNBC that increased rail dwell times at West Coast ports are concerning for retailers as they head into the all-important holiday shipping season. end.

“We recognize that imports through the port have increased significantly over the past few months,” Gold said. “Retailers are working hard to receive shipments as quickly as possible. It is critical that stakeholders work together to keep shipments flowing and move goods out of ports to avoid further delays.”

Freight rail lines revamped for record freight volumes

A spokesman for Union Pacific said the increase in container volumes was already having an impact. “Union Pacific is utilizing its buffer resources (employees, locomotives and railcars) to manage double-digit international intermodal cargo volumes from the Ports of Los Angeles and Long Beach,” the spokesperson said, noting that the Port of Los Angeles alone reported 37% Growth compared with 2023, grew by 16% in July and August.

“We also continue to see changes in traffic from the East Coast. To balance this, we are working with our customers to temporarily manage container traffic into Los Angeles and Long Beach to keep supply chains flowing,” the spokesperson added.

A BNSF Railway spokesman said that in the first half of 2024, BNSF’s terminal volume set a half-year record, and the company reached 1 million terminal freight volumes in one year at the fastest time.

“In recent weeks, we have encountered a number of challenges beyond our control, including the volume of cargo being diverted from the east; Lithium battery catches fire “This has forced the port to temporarily close. Such disruptions may take days or even weeks to ease, and we are doing our best to resolve them,” a BNSF spokesperson wrote in an email.

The BNSF spokesperson added that the network is “accelerating” but must also rely on exchange partners, terminal operators and freight providers to execute their operational plans to keep the entire point-to-point network running smoothly.

“BNSF was able to handle the record throughput entering the port because we have taken many steps to prepare for the busy season, including investments we made in capacity along the Southern Transcon Line, BNSF Rail’s mainline. Los Angeles and Chicago), adding more than 100 miles of primary track and 8,000 additional parking spaces within our intermodal hub.

“Even without a full container load, we are on schedule to run full westbound trains out of Chicago to get the required railcars back to the port. … Our container yard capabilities are already in place at our major destination facilities preparations for unloading trains,” the spokesperson added.

Supply chain executives say shipping customers are worried

Logistics managers told CNBC that in Los Angeles and Long Beach, the average dwell time for containers from being unloaded on ships to being loaded onto rails is about two weeks. In some isolated cases, stays lasted as long as four weeks, they said.

Paul Brashier, vice president of global logistics at ITS Logistics, told CNBC that the company is continuing to implement the contingency plans it has developed since the Red Sea diversion began, but is avoiding potential rail issues at the port as much as possible.

“With no final resolution to the ILO strike and the Red Sea conflict, we expect diversions to continue,” Brashear said. “For us, the most efficient and cost-effective way to transport our customers’ cargo is around The initial rail terminal through the port. We grab the containers at the port, unload the rail ocean containers before they arrive at the rail, then reload the cargo into trucks for further transport inland and into our customers’ supply chains.

While the ILA, East Coast and Gulf Coast port ownership have reached a tentative agreement on wage issues, automation issues remain to be resolved before the January deadline to complete the agreement and remain. A sensitive issue in the negotiations, the two sides have great differences.

Geotz Alebrand, head of ocean freight for the Americas at DHL Global Forwarding, said extended dwell times at West Coast ports, especially Los Angeles, are a concern for many customers.

“The main factor contributing to this problem is the insufficient supply of streetcars back to the West Coast,” Allebrand said. “So there could be delays of anywhere from five to 15 days depending on the specific terminal, where the cargo is by rail. Or trucking, and the final destination ramp.”

Allebrand said DHL is advising customers to consider alternative strategies to mitigate these delays. One possible solution is to reroute cargo to East Coast ports.

“For those with intra-point intermodal (IPI) destinations, it’s especially important to account for potentially longer dwell times,” Allebrand said. “However, it is worth noting that some customers are hesitant to make this switch as negotiations surrounding East Coast labor contracts are ongoing,” he added.

Both norfolk southern airways and CSX Move rail freight out of East Coast ports. Both railways have benefited from the rerouting of West Coast Rail containers to avoid lengthy delays during the coronavirus pandemic.