US port safeguards extend to freight rail supply chains
The port bottlenecks that have tied up U.S. supply chains are spreading from the docks to the nation’s freight rail networks, driving up costs and adding new shipping complications for importers trying to manage the flow of goods.
Some retailers are waiting weeks to transport goods by rail from the ports of Los Angeles and Long Beach in Southern California, while others are ditching the railroads and shifting shipments of furniture, clothing and accessories. other consumer goods to trucks for long domestic highway trips.
The safeguards extend to major freight hubs, including the key transit point in Chicago, according to freight officials, where containers have piled up in rail yards. Congestion has led BNSF Railway Co., a unit of Berkshire Hathaway Inc. and one of the major rail operators connecting the US West Coast to inland points, to limit the number of boxes the railroad will haul from the Southern California port complex.
Lisa Leffler, senior manager of international logistics for Black Diamond Equipment Ltd., an outdoor sporting goods retailer based in Salt Lake City, Utah, said her company transfers some goods to trucks, even if it can add thousands of dollars per load to already high prices. transportation costs. “That’s what we were doing at the height of the congestion in 2021,” Ms Leffler said.
Congestion in intermodal operations, which combine road and rail transport for longer freight journeys, adds to delays in getting goods to distribution centers and stores. It also adds to the headaches of retailers struggling with inventory that doesn’t match consumers’ changing buying habits and increases shipping costs at a time when transportation costs have contributed to high US inflation for decades. .
U.S. importers have struggled for more than a year with weeks of waiting for ships to unload at California ports, the main U.S. gateway for goods from Asia. A queue of ships for berths that reached more than 100 ships in January has fallen below 20 this month, according to the Marine Exchange of Southern California, its lowest level since July 2021.
About 29,000 boxes were held in container yards at the Port of Los Angeles this month awaiting pickup by rail, more than triple the usual number, according to Gene Seroka, the port’s executive director.
The Pacific Merchant Shipping Association says rail containers waited at the ports of Los Angeles and Long Beach an average of 11.3 days in May, 18% more than April and triple the average wait time at the start. of the year.
The two railroads serving the ports, Union Pacific Corp.
and BNSF, say delays in picking up boxes are caused by congestion at freight yards thousands of miles inland in logistics hubs like Chicago.
Transport and logistics companies say containers are piling up there because manufacturers and retailers are too slow to pick up and unload goods. A Union Pacific representative said freight owners need to manage their shipments “in a timely manner so that inland terminals stay smooth and we can continue to move containers from ports.”
Rail congestion rekindles safeguards that overwhelmed freight hubs last summer, when railroads faced with growing stacks of containers in Chicago and other locations stopped accepting shipments from ports for days or weeks in order to clear the backlog.
National supply chains are struggling to manage freight surges that disrupt freight operations, said Lawrence Gross, president of Gross Transportation Consulting. Intermodal volumes have fluctuated wildly over the past year, he said, dropping rapidly over the past summer and fall and then coming back over the past six months.
“That push-pull is very difficult to manage,” Mr. Gross said, especially when the railways “don’t have much warning of what’s coming and the changes are severe.”
Tom Williams, vice president of the consumer products group at BNSF, said the railroad is limiting the number of containers it takes out of Southern California ports until it can be sure it has the ability to process them in Chicago.
Mr. Williams said containers were staying about 20% longer in cargo yards in Chicago compared to a year ago. BNSF is moving some containers to third-party yards to free up space, he said, but that’s using domestic trucking capacity which is also in short supply. “It’s not sustainable over time,” he said.
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Transportation and logistics officials say shortages of warehouse workers and truck drivers as well as steel trailers needed to move containers between yards and warehouses are contributing to the delays.
Dan Bergman, managing director of TraPac LLC, which operates a container terminal at the Port of Los Angeles, says its yards are filled with 5,000 containers waiting to be transported by rail, about triple the usual number.
The terminal cut five shifts this month because there was not enough rail capacity to load the boxes, he added. “The numbers are not improving,” he said. “At some point, we’re going to run out of space.”
Write to Paul Berger at [email protected]
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