Recent reports indicate a substantial increase in rail container backlogs at the Los Angeles-Long Beach maritime terminals, driven by a surge in imports, intensifying cargo transportation pressures.
Yusen Terminals, operating in Los Angeles, now holds more than double its typical inventory of rail containers. To mitigate the impact on cargo handling operations, Yusen Terminals has initiated transfers of containers to nearby yards from the terminal itself. This proactive measure aims to alleviate congestion and ensure smoother logistics operations amidst the current challenges.
In response to a sharp rise in imported goods from Asia, leading to severe backlogs of rail containers at maritime terminals in the ports of Los Angeles and Long Beach, the Burlington Northern Santa Fe Railway (BNSF) and Union Pacific Corporation (Union Pacific) have announced proactive measures.
Both railway companies are committed to reorganizing railway track vehicles in the Los Angeles-Long Beach area. This strategic initiative aims to enhance terminal capacity for handling the surge in intermodal traffic. The increased eastbound intermodal train transport has exacerbated the shortage of westbound railway vehicles, prompting these efforts to optimize operational efficiency and alleviate congestion at the terminals.
Alan McCorkle, President and CEO of Yusen Terminals, has highlighted significant challenges facing terminal operations at the Los Angeles-Long Beach port complex. The accumulation of eastbound containers has led to the utilization of near-dock storage space, resulting in additional costs for the company.
Operators within the largest port complexes in the United States have expressed concerns about the current situation. Despite adequate railway vehicles provided by rail companies to handle eastbound intermodal shipments to the U.S. interior, terminal storage capacity is nearing saturation. There is apprehension that if import volumes continue to rise in May and June, facilities could quickly become congested, potentially reaching a critical point.
Data from the Pacific Merchant Shipping Association (PMSA) underscores these challenges. The average dwell time of rail containers at the Los Angeles-Long Beach terminals has shown a steady increase this year:
• January: 4.2 days
• February: 6.26 days
• March: 7.02 days
• April: Instances of containers staying over 9 days in the first three weeks, with dwell times accelerating towards the end of April.
These trends highlight the pressing need for enhanced operational strategies and capacity management at the ports to mitigate congestion and maintain efficient cargo flow amidst escalating import volumes.
According to PIERS data, Asian import containers landed in Los Angeles-Long Beach increased by 29.7% year-on-year in the first quarter, reaching 1.96 million TEUs.
According to the Intermodal Association of North America (IANA), in January, about 190 more double-stack cars loaded with eastbound containers were leaving the Southwest Pacific region daily than those returning loaded or empty. When inland point intermodal (IPI) cargo booked with carriers arrives at the West Coast, liner companies simply dump the cargo at the ports and tell the terminals and rail companies to “handle it.”
The extended dwell time of rail containers to nine days or more presents a significant challenge to terminal operations. Terminals must relocate containers within their limited facilities to accommodate the large influx of import boxes from the weekly vessel discharges. This situation is particularly acute in the Los Angeles-Long Beach area, where terminals have reached their storage capacity limits and are concerned about the projected sharp increase in imports predicted by U.S. retailers in the coming months.
According to the Global Port Tracker report released by the National Retail Federation on April 9, U.S. import volumes are expected to continue increasing year-on-year through at least August. GPT forecasts a 5.5% year-on-year increase in imports in May, 8.9% in June, 6.6% in July, and 6.9% in August.
Notably, about 35% of the cargo unloaded weekly is transported by rail to inland points, whether at the terminal or off-dock. Generally, IPI cargo accounts for about 30% of the entire vessel, but during the pandemic, IPI cargo saw months of delays, causing its share to drop to 10%. Currently, the 35% proportion, while not the highest in history, is still about 5% above the average level. For the Port of Los Angeles, an additional 5% in IPI cargo means an extra 5,000 TEUs are stuck at the rail yard each week. The situation is similar at the Port of Long Beach, with an additional 10,000 TEUs per week across both port areas being held up at the rail yard.
The share of IPI containers awaiting rail transport for more than 9 days at the two port areas stands at approximately 15%. Typically, containers move from vessel unloading to rail loading within 4 to 5 days, barring expedited rail transport. Should dwell times extend to 7 days or more, this share is expected to surpass 20%. Rail companies often receive IPI volume data later, potentially exacerbating delays in IPI shipments if sudden surges in rail cargo occur without adequate preparation.
The influx of imports signals global economic recovery but also poses challenges such as strained terminal capacity and inefficient rail logistics. These issues not only impact the operational efficiency of ports and logistics firms but also disrupt the timely delivery of goods and hinder cost management. As a result, local transfer of some IPI cargo from Los Angeles is anticipated, necessitating the involvement of trucking companies for transportation solutions.
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