US deliveries hit by delays as record imports spark west coast port congestion
Ian Putzger in Toronto 24/01/2019 (Excerpted from www.joc.com)
US importers are bracing themselves for more delays in the coming weeks, as congestion at the major west coast container gateways worsens, exacerbated by shortages of container chassis and rail cars.
“We’re seeing unprecedented levels of cargo,” said Mario Cordero, executive director of Port of Long Beach. And a spokesperson for the port of Los Angeles added: “We have seen particularly heavy volumes in recent months, warehouse space is at a premium and there have been issues with chassis availability.”
Some logistics companies issued warnings to their clients as early as December about the increased congestion and import flows have not abated since, putting increasing strain on infrastructure.
As The Loadstar reported yesterday, as many as 22 vessels were added by lines in recent weeks to meet demand, and the terminals have struggled to unload them.
American Global Logistics reported that in some cases vessels were waiting two or three shifts after arrival before labor could be allocated to them.
In its weekly update, Flexport warned clients of “extreme congestion” at the Los Angeles/Long Beach port complex, as well as at the New York ports.
The company identified a combination of factors: peak season traffic; the run-up to Chinese New Year; and the prospect of further tariffs on imports from China.
“Spring cargo shipments are up compared with this time last year, mostly due to the tariff situation,” said a spokesman for XPO Logistics. “We believe that’s caused some ripple effects, including an increase in the amount of time containers stay at the ports and the time it takes for a truck to visit.”
The congestion at the terminals has impacted chassis availability, which is, in turn, aggravating the situation further, forwarders say. And according to MIQ Logistics, rail cars have also been in short supply.
Burlington Northern Santa Fe reported it had been “moving strong volumes while confronting challenging conditions in some areas of the network”.
Operators are looking to the Chinese New Year holiday, which starts on 5 February, to ease the pressure and allow them to get back on top of things.
“Chinese New Year should provide a breather and allow the supply chain to recover a bit before cargo flows resume in earnest. The port is working closely with all our partners to move containers through the harbor and we thank everyone for their patience,” said Long Beach’s Mr. Cordero.
The wild card in this scenario is the question of whether the US and China will make progress towards resolving the trade dispute and avert further tariffs. Flexport and MIQ Logistics have advised customers delays are likely to continue into mid- or late February.
“We see these stronger cargo volumes continuing for the next few weeks due to the uncertainty surrounding tariffs,” the XPO spokesperson said.
Vessel activity looks set to shrink significantly after Chinese New Year. Nerijus Poskus, vice-president and global head of ocean freight of Flexport, noted that the container lines had announced more than 40 blank sailings on the transpacific eastbound sector for February, along with nine or so Far East westbound.
Capacity will likely be tight then, he warned.
Long Beach, © trekandshoot | Dreamstime.com
Container congestion ripples to US interior
Ari Ashe, Associate Editor | Jan 18, 2019 5:29PM EST (Excerpted from www.joc.com)
Cargo owners are facing weeks-long delays and demurrage bills into the thousands of dollars as international containers stockpile at Union Pacific Railroad’s (UP) Marion terminal in Memphis, Tennessee, and Global IV terminal in Joliet, Illinois.
The surge of imports into Los Angeles and Long Beach causing congestion in December is now spreading inland, although there are no complaints yet about BNSF Railway’s yards. The volume spike is also bringing back two chronic issues: chassis shortages and lack of trucker choice. Ocean carriers and terminal operators have advised that this disruption may continue until mid-to-late February, according to MIQ Logistics.
“There is significant chassis tightness in several key markets as the heavy surge of imports that landed on the US West Coast prior to the New Year continues to flow to the inland terminals,” UP wrote. “There is still considerable import freight at the west coast ports, so we expect heavy volumes to continue at the inland terminals for several weeks.”
The gridlock is due to a mixture of multiple factors hurting fluidity inland. There have been 34 extra-loader vessels Los Angeles and Long Beach since November, as imports climbed more than 20 percent in December. Beneficial cargo owners (BCOs) were shipping spring merchandise before tariffs were due to rise to 25 percent on Jan. 1, 2019. The Trump administration delayed the escalation, but containers were already in transit before the announcement.
As the surge comes inland, the cooperative chassis pools are bare. There aren’t enough for the international containers, but when these truckers volunteer their own chassis, terminal operators refuse. Meanwhile, UP is levying demurrage fees of $100 per day while the mess is sorted out, but they won’t escalate the fees until further notice.
Global IV delays will linger through January
Ayano Nakamura, a dispatcher with Senko USA, said they have containers sitting in Global IV since Jan. 3. Drivers have volunteered to use their own chassis, but the terminal won’t oblige without permission from Ocean Network Express (ONE) and Evergreen Line, which are the two primarily affected.
“UP is claiming it’s a chassis issue, but it’s not really just a chassis issue because on Jan. 5 and 6 we took in our own chassis, we asked how we could help, and the crane operators refused to service us,” Nakamura said. “Our demurrage is in the thousands and it’s not our fault.”
UP wasn’t available for further comment beyond pointing to its customer service notice.
Under carrier haulage, also called a door move, an ocean carrier directs the drayman to use a specific chassis. Evergreen and ONE use the Chicago and Ohio Valley Chassis Pool (COCP), administered by Consolidated Chassis Management (CCM).
But Frank Klimala, a terminal manager with Horizon Freight System, believes box rules should be suspended until the situation is resolved.
“If you have to charge us for a lift, charge us. Our BCO would rather have their box delivered than sitting. They will pay the extra money for my chassis if it means their box isn’t sitting for days or weeks,” Klimala said. “The ocean carriers should instruct UP to allow our chassis. Let’s get as many boxes out of there as possible.”
The process is complicated, however, according to one source, who said unearthing containers when truckers arrive with their own chassis would disrupt all terminal operations.
Others said it’s nonsensical that UP would charge demurrage when the truckers are offering a solution.
Jon Poelma, president of CCM, said spot shortages in December in Cincinnati, Ohio, and Detroit prevented an injection of chassis into Chicago. Those situations have been resolved so CCM is concentrating on Global IV.
“It’s unfortunate to see this stuff put on the ground, but we are in the process of cleaning this up,” Poelma said. “I’d like to tell you it would be cleared Monday, but I can’t. It will take a couple weeks because it takes a lot of coordination to move the equipment.”
He understands the surge of volume was a foreseeable event but calls it a math problem.
“It’s hard to know where all the freight is going. Is it going to Global IV in Chicago, is it going to BNSF [Logistics Park Chicago] or is it going to the Ohio Valley? We had a decent forecast but not accurate enough,” Poelma said.
Delays also persist in Memphis
Containers are also piling up in UP’s Marion facility in Memphis, where the situation is about as bad as Chicago.
“We have containers sitting at the UP that have been grounded for over a week because there are no chassis available with charges being billed to importers of record. I am talking about thousands of dollars this week alone on a move where the container is in the stack with no end in sight,” said Neely Mallory, president of Mallory Alexander.
Poelma acknowledges there has also been stress on CCM’s Memphis pool, but he said the issue should be resolved soon.
“There was some pain after Christmas into the first 10 or 11 days of 2019, but containers should be off the ground pretty soon, if not already. As far as our pool is concerned, everything should be clearing up,” Poelma said.
One source told JOC there are serious shortages in the TRAC Intermodal chassis pool. TRAC is a major equipment provider in UP’s Marion terminal.
“The Memphis market is experiencing record-high cargo volumes. The current congestion at rail terminals and the resulting stress on chassis supply have been attributed to the large Trans-Pacific volumes arriving in extra loader ships,” TRAC said in a statement to JOC. “The flow of traffic should get back to normal levels once the pre-tariff surge gets absorbed into the distribution system.
It’s not a good situation, by any means, but cargo owners can hopefully take some solace in knowing no one is spared here. As truckers wait three, four, or five hours to be serviced, other jobs are bumped to a second day causing other BCOs to experience delays too.