Bill Mongelluzzo, Senior Editor | Mar 31, 2022 1:57PM EDT
Fearing that another rail meltdown similar to the one that occurred last summer is imminent, West Coast port managers and terminal operators are urging the Class I railroads to immediately boost their deployment of railcars and locomotive power in Los Angeles-Long Beach, Oakland, and Seattle-Tacoma.
Five terminal operators and three port managers told JOC.com this week that a recent surge in intermodal bookings through the West Coast, which both the terminals and the railroads welcome, caught the railroads without enough railcars and locomotive power to handle the spike in demand.
“[The railroads] asked for it, they got it, and they can’t support it,” Anthony Otto, president of Long Beach Container Terminal (LBCT), told JOC.com Wednesday.
LBCT on Tuesday had 8,000 rail containers at its terminal, rather than the normal 1,000 to 1,500. LBCT has had to cut back on longshore labor gangs that are prepared to work because the backlog of rail containers leaves the terminal nowhere to discharge import containers from vessels, Otto said.
“It’s happening everywhere,” said Ed DeNike, president of SSA Containers. SSA Marine operates three container terminals in Long Beach, as well as Oakland International Container Terminal, and two terminals in Seattle.
“We cannot discharge containers to the railroads until they tell us they will give us trains,” DeNike said. “It’s just like last summer.”
BNSF said in a statement key areas of its network are experiencing some reduced rail car availability. “This is due primarily to delays in freight moving off the railcars and out of our yards, which in turn slows our ability to unload trains and return the railcars to service,” the railroad said.
UP, in a statement, said the railroad’s operations in Chicago are fluid, although intermodal rail traffic from the West Coast is increasing.
Both railroads said they are working with the ports, terminal operators, ocean carriers, and shippers to coordinate efforts to handle what appears will be even larger inland point intermodal (IPI) volumes in the coming months.
Terminal operators say they would welcome the opportunity to work with the railroads on relieving bottlenecks if only they could get through to them.
“I don’t know what’s causing this. The railroads aren’t saying much,” a terminal operator in Southern California who spoke on the condition of anonymity told JOC.com. The source added that conditions in Los Angeles-Long Beach have caught the attention of the Biden administration’s task force on port productivity, which has set up a second working group tasked with addressing the shortage of rail service.
Several factors converging to create rail mess
West Coast port and terminal sources say several factors in recent weeks have converged to create the current conditions that the terminals say could get worse before they get better — IPI bookings are increasing rapidly after the Lunar New Year lull, railroads are not taking railcars out of storage quickly enough to meet fresh demand, and rail ramps in the interior US are becoming congested again.
Also, with US containerized exports down, eastbound IPI moves are stronger than westbound moves. Railroads generally hesitate sending empty rail cars back to the West Coast for economic reasons.
“Railroads are only thinking about one thing — balance. And they’re thinking about yield,” said another terminal operator in Los Angeles-Long Beach who did not want to be identified.
Alan McCorkle, president of Yusen Terminals in Los Angeles, said the shortage of railcars has already raised a yellow caution flag in Southern California, which could lead quickly to a red flag. “We need railcars. We need bare tables,” he said.
Last summer, when their ramps in Chicago, Memphis, and other inland locations became congested with laden import containers, the railroads announced they would “meter” the number of trains and railcars they sent to the West Coast. The metering helped the railroads to decongest their inland ramps rather quickly, although the buildup of rail containers that ensued at West Coast ports had a knock-on impact on terminal and warehouse congestion, chassis shortages, and gate congestion.
The railroads have yet to formally announce that they are metering IPI volumes from the West Coast to relieve pressure at their inland ramps, but a terminal operator in Los Angeles-Long Beach told JOC.com the railroads are “already restricting inland moves.”
Average rail container dwell times in Los Angeles-Long Beach, which should be three days or less to promote terminal fluidity, increased to 5.2 days in February from 3.5 days in January, according to the Pacific Merchant Shipping Association. Noel Hacegaba, deputy executive director and COO at the Port of Long Beach, said dwells have gotten even worse in March. “Dwell times in Long Beach are seven days,” he told JOC.com.
Terminal operators say IPI traffic began growing in February, but then there was a lull during the Lunar New Year. IPI volumes have increased strongly over the past two weeks, but the railroads were not prepared for the current surge, said a terminal operator.
“The shame of it all is there was a lull, but the railroads never really caught up,” said the source, who did not want to be identified.
Rail problems move up the coast
While the rail issues first surfaced in Southern California, they are now hitting Oakland and the Northwest Seaport Alliance of Seattle and Tacoma (NWSA).
“Dwell times are increasing here in Oakland,” Bryan Brandes, maritime director at the Port of Oakland, told JOC.com. “Rail providers do not have enough rail cars on the West Coast. UP will need to start grounding containers in the Oakland yard. They refuse to ground international containers.”
The railroads are experiencing congestion and chassis shortages at their inland hubs, and warehouses in the Midwest are experiencing labor shortages, so terminal operators in the Pacific Northwest are now experiencing the residual effects, Thomas Bellerud, COO at the Northwest Seaport Alliance of Seattle and Tacoma, told JOC.com.
“This has created a delay in getting railcars back to us. Their assets are under load — sitting there in the Midwest,” he said. Bellerud added that the railroads are asking ocean carriers to provide more two-way shipments, which would help them to reposition railcars back to the PNW.
With 3,000 to 4,000 rail containers sitting on terminals in the NWSA, or about three to four times the normal number, the congestion is “reducing the gang structure” of longshore workers working the docks, Bellerud added.
Terminal operators up and down the West Coast are pulling back on labor requests as congestion builds at the terminals, said Jim McKenna, president of the Pacific Maritime Association, which represents employers. He said those conditions are tied directly to the shortage of capacity that the railroads are directing to the West Coast.