Freight rail congestion at the Port of LA exceeded two years before the holidays

Record imports over the past few months at Western ports are leading to congestion on the rail, as holiday goods and everyday items pile up. About half of the containers loaded by freight trains out of the Port of Los Angeles wait nine days or more to get out of the port and onto the rail.

Before the increase in August and September containers, the average train stay in the San Pedro Basin (including the Port of LA and Long Beach) was four days.

In September, the Port of Los Angeles shipped a total of 954,706 twenty-foot units making it the best month ever for September. At the port’s monthly freight briefing Friday, executive director Gene Seroka told CNBC that there are currently 20,000 rail containers sitting at the port waiting to be loaded, and he’s talking to railroads every day about increased dwell times.

But he emphasized that the rail congestion does not lead to other problems at the port in terms of the operation of ships and trucks. This does not affect the operation of the port,” said Seroka. “We want to make sure we’re improving all port operations. Rail continues to be our focus.”

Seroka said he is monitoring three important factors related to future container growth and the port’s ability to move all cargo properly: the Lunar New Year, the US presidential election, and the strength of the economy, which currently continues to look strong based on the latest port volume data.

“October is going to be another strong month,” said Seroka. “We don’t see clear signs of regression. We’re looking at 800-000 years. [TEU] width. We have an early Lunar New Year. In terms of costs, we could see an increase in assets early to avoid those additional costs depending on the outcome of the president and jobless claims being low.”

Republican President Donald Trump has continued to lash out at new trade tariffs if he wins the election.

At the Port of Long Beach, container train wait times are seven days, but he said the port is not overcrowded, Mario Cordero, executive director, told CNBC.

“Given our historic number of TEUs passing through [the Port of Long Beach] In the past three months, rail accommodation is not an immediate concern,” said Cordero. “The Port of Long Beach has no congestion or problems, our operations are not wet. We are well positioned to achieve a sustained record load given our current capacity. “

Cordero said there has been a nearly 26% increase in dock rail traffic.

In September, the Port of Long Beach shipped 829,499 twenty-foot units. September marked the fourth year in a row of year-on-year increases in cargo at the port, with holiday-related products driving the increase.

Companies that sell chemicals are involved

Matt Shay, CEO of the National Retail Federation, told reporters at a holiday sales forecast forum this week that he expects strong numbers for the rest of the year. “[We] “You feel very happy when retailers are in the cycle of goods and meeting consumer demand,” he said. The National Retail Federation’s forecast is for winter holiday spending to grow between 2.5% and 3.5% in 2023, in line with its annual sales forecast, and reach as high as billions. $989 in holiday spending in November and December, slightly above last year’s level Amazon recently announced its plan to hire 250,000 more workers during the holiday season, the same seasonal hiring rate as last year.

According to the global data company Panjiva, which tracks shipping bills, digital receipts for cargo containers, between September 1 and October 14 at the Port of Los Angeles, products worth $ 231 million were identified as “Christmas,”; $78 million was identified as “Vacation”; $7.6 million worth of product marked “Hanukkah” (another $1.3 million for “Chanukah”); and $755,000 as Kwanzaa. Items include house decorations, lights, trees, candles, menorahs, nutcrackers, and wreaths. Some of the companies listed under these categories include Home Depot, Target, and Walmart.

Holiday items aren’t the only products in boxes, with Kohls sweaters, and 92 containers filled with 1,840 packages of Chinese company BYD’s solar panels, as well as home improvement products, among the cargo entering the port.

Eric Byer, CEO of the Alliance for Chemical Distribution, said the ports of Los Angeles and Long Beach are important ports for important chemicals that come from China every day, including citric, sulfuric and ascorbic acid.

“These chemicals are key ingredients in everything from household cleaning products, vitamins, soft drinks and energy drinks. Due to the increased volume entering these ports due to the East Coast port strike, shipping delays have increased forcing ACD members to reroute to other ports on the Coast in the western and southern US,” Byer said.

Jon Gold, vice president of supply chain and merchandise policy at the National Retail Federation, told CNBC that the increase in rail dwell times at Western ports is concerning for retailers at the end of the most important shipping season for holiday goods. .

“We see that there has been a significant increase in the volume of imports through the ports in the past few months,” said Gold. “Sellers are working to get their cargo as quickly as possible. It is important that stakeholders work in a unified effort to keep the cargo intact and get the cargo out of the ports to avoid delays.”

Freight railroads are making changes to record volumes

A spokesperson for Union Pacific said the increase in containers had an impact. ““Union Pacific uses its resource portfolio (crew, trains and railcars) to handle double the amount worldwide from the Ports of Los Angeles and Long Beach,” said a spokesperson, noting that the Port of LA alone reported a 37% increase in July and 16% in August compared to 2023. To balance this, we are working with customers to temporarily manage the flow of containers in LA and Long Beach to keep the supply chain fluid,” the spokesperson said.

A BNSF spokeswoman said the first half of 2024 was a record half-year for local volumes for BNSF, and the fastest the company has reached a million lifts at the docks within a year.

“We have encountered several challenges in recent weeks beyond our control, including diverted volumes from Mpumalanga, and a lithium battery fire that forced a temporary port shutdown,” a BNSF spokesperson said in an email. “Disruptions like this can take days or weeks to subside, and we’re doing everything we can to fix it.”

A BNSF spokesman added that the network is “fast,” but must also rely on exchange partners, terminal operators, and dray providers to use the same approach in their operations to keep the entire point-to-point network running smoothly.

“BNSF was able to manage these record port arrivals because of the many steps we have taken to prepare for the busy season, including the investment we have made to operate our Southern Transcon. [main line of the BNSF Railway between Los Angeles and Chicago]adding over 100 miles of main track and 8,000 additional parking spaces within our car parks.”

“We are also leaving westbound trains from Chicago on schedule even without a full container load to get the needed cars back to the ports. … Our container yard capacity is ready at key destinations to unload trains,” the spokesman added.

Supply chain executives say shipping customers are worried

Transportation executives told CNBC the average dwell time for a container to be unloaded from a ship to be loaded onto a rail is about two weeks in Los Angeles and Long Beach. In some isolated cases, stay times are up to four weeks, they said.

Paul Brashier, ITS Logistics’ global vice president, told CNBC that it is continuing with the emergency plan that has been in place since the Red Sea diversion began, but to avoid potential problems at the port.

“Since there is no final solution to the ILA strike and the Red Sea conflict, we expect that volume changes will continue,” Brashier said. “The most efficient and cost-effective way to transport our customers’ goods is through the first rail terminal in the port. We catch the container at the port before it reaches the rail, unload the rail container at sea, and then reload. The goods are transferred to the truck. It is then transported inland and put into the supply chain of our customers.

Although the port ownership ILA and the East and Gulf Coast ownership reached a fixed agreement on wages, the issue of automation has yet to be resolved by the January deadline for a completed agreement, and it remains a critical issue in the negotiations where the groups were very divided.

Geotz Alebrand, head of ocean freight in the Americas for DHL Global Forwarding, said the extended dwell time at West Coast ports, particularly the port of LA, is a concern for many customers.

“The main factor that affects this issue is the lack of rail cars going back to the West Coast,” said Alebrand. “As a result, there may be delays ranging from 5 to 15 days, depending on how the particular facility operates and whether the goods are transported by train or truck, and the final ramp at the destination.”

Goetz said DHL is advising customers to consider other strategies to reduce these delays. One viable solution is to reroute cargo to East Coast ports.

“For those with Intra-Point Intermodal (IPI) facilities, it is very important to account for the potential length of stay,” said Goetz. “However, it is worth noting that some customers are hesitant to make this change due to the ongoing negotiations regarding the East Coast labor contract,” he added.

Both Norfolk Southern again CSX move rail freight out of East Coast ports. Both railways have benefited from the diverted trains bound by West Coast Rail during the Covid period to try to avoid long delays.