Port of Los Angeles freight rail delays
reach two-year high, with holiday and
everyday items piling up
From: CNBC.com
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
Key Points
- Almost half of the containers bound by freight rail out of the Port of Los Angeles are waiting nine-plus days to get out of the port and onto the rail.
- Record September imports driven by the recent East Coast and Gulf Coast strike diversions and ongoing Red Sea issues have clogged up container rail yards at the nation’s busiest ports.
- Dwell times, or how long containers sit at ports, have spiked to a two-year high at Los Angeles and Long Beach, though port officials say operations continue to run efficiently.
Record imports over the last several months at West Coast ports, driven by the recent East Coast and Gulf Coast strike diversions and ongoing Red Sea issues, are leading to congestion on the rails, as holiday goods and everyday items pile up.
Almost half of the containers bound by freight rail out of the Port of Los Angeles are waiting nine-plus days to get out of the port and onto the rail.
Before the August and September container surges, the average rail dwell time, or how long a container sits at port, for the San Pedro Basin, which includes the Port of LA and Long Beach, was four days.
In September, the Port of Los Angeles moved a total of 954,706 twenty-foot equivalent units, or TEUs, making the month its best September ever. At the port’s monthly cargo briefing Friday, Executive Director Gene Seroka told CNBC there are currently 20,000 rail containers sitting at the port waiting to be loaded out, and he is speaking with the railroads on a daily basis about the increased dwell times.
But he stressed that the rail congestion is not leading to any additional issues at the port as far as vessel and trucking operations. “This is not impacting port operations,” said Seroka. “We want to make sure we improve on all port operations. The railroads continue to be our focal point.”
Seroka said he is monitoring three key factors related to future container growth and port ability to move all of the cargo efficiently: early Lunar New Year, the U.S. presidential election, and the strength of the economy, which currently continues to look strong based on the recent port volume data.
“October is shaping up to be another strong month,” Seroka said. “We see no precipitous signs of a pullback. We are looking at the mid-800-thousand [TEU] range. We have an early Lunar New Year. With tariffs, we may see an uptick of cargo in early to avoid those extra costs depending on the presidential outcome, and unemployment claims are down.”
Republican presidential candidate former President Donald Trump has continued to talk aggressively about new trade tariffs if he wins the election.
At the Port of Long Beach, the rail dwell times for containers are seven days, but the port is not experiencing congestion, Executive Director Mario Cordero told CNBC.
“Given our historic number of TEUs moving through [the Port of Long Beach] for the last three months, the current rail dwell is not of immediate concern,” Cordero said. “Port of Long Beach is not experiencing any congestion or bottlenecks, our operations are fluid. We are in a good position to receive continued record cargo given our current capacity.”
Cordero said there has been an increase of approximately 26% in on-dock rail movement.
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
Insurance & Claims for Loss or Damage
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
Did you know:
General insurance policies rarely cover marine cargo claims. You need a marine cargo insurance policy, or you may need to purchase marine cargo insurance on each shipment.
Many carriers will not take responsibility for loss or damage if a warehouse signs off clean on a POD. It is critical, before signing a POD, to note the condition of the cargo. Claims are usually time-barred, unless filed within a few days (standards vary by carrier). So alert your carrier to possible damage immediately. The best way to do this is by signing the delivery receipt notating damage! And be specific, for example, 8 glasses broken, 10 boxes crushed (Make ensure that you have the correct boxes or pallet count).
Every Shipper Needs Cargo Insurance
Global trading involves risk; however, marine cargo insurance coverage minimizes your financial risk.
Don’t leave your livelihood up to chance!
Statistics show that one ship sinks each day and you will experience a General Average loss every eight years. If you depend on the carrier to cover losses, their responsibility is very limited (by law), as follows:
Ocean Carriers $500 per shipping unit (a shipping unit may be defined as one ocean container)
Air Carriers $9.07 per pound
Truckers $0.50 per pound
The cargo insurance we offer is competitively priced and insures approved merchandise against physical loss or damage from external causes. By purchasing cargo insurance, you can avoid inconvenience and frustration. Contact your BOC Representative for your free quote.
Shippers who rely on suppliers to furnish cargo insurance or who rely on their carriers to take responsibility for losses may be in for a big surprise. Protect your investments by insuring your goods, and provide peace of mind.
According to internationally accepted trade terms, referred to as Incoterms, suppliers selling CIF are responsible for arranging cargo insurance. But just because your supplier has the obligation to arrange insurance under CIF terms, it doesn’t mean that they are ultimately responsible if your product is lost or damaged during transit. The ultimate burden of loss falls upon you, the buyer. This is why many experts recommend importers change their buying terms to control the selection, and thereby, the quality, of insurance coverage.
Foreign suppliers and their forwarding agents often add on additional fees to the insurance costs. Those added fees inflate the cost of insurance well beyond market pricing for the same coverage purchased in the United States. Find out how much you’re really paying and then compare quotes received from
BOC International.
Additionally, when other parties arrange insurance, you run the risk of having inadequate insurance coverage. Cargo insurance policies can vary widely in levels of coverage, deductibles and special restrictions. Ask for a complete copy of the insurance policy or for a certificate of insurance detailing all the policy terms and conditions.
At least make certain the insurer being used has a favorable financial rating supplied by a respected financial rating service. BOC’s insurance company, underwriters at Lloyd’s of London, has an A.M. Best financial rating of A (Excellent).
Ask your supplier for a list of insurance claims adjusters contracted by the insurance company. Adjuster and surveyor networks approved by Lloyd’s of London and AIMA are among the most credible. BOC has a vested interest in your insurance needs and will directly handle cargo claim documentation requirements to ensure prompt processing and timely settlement.
Are you familiar with GENERAL AVERAGE?
There are a number of notable cases of damage or loss to a vessel, with many resulting in General Average! More recent examples include:
- Ever Forward, March 2022
- Ever Given, April 2021, stuck in the Suez Canal
- Yantian Express, January 2019
- APL Vancouver, January 2019
- ER Kobe, February 2019
- Sincerity Ace – January 2019
- Maersk Honam – March 2018
- Maersk Kensington – March 2018
- Hyundai Auto Banner – May 2018
- MOL Prestige – February 2018
- Caribbean Fantasy – June 2018
Ever Given – The claim process is still ongoing. The average time a case can take is two to seven years.
General Average claims can include a long list of expenses, including damage to the vessel, re-floating efforts, towing and salvors. Egypt alone believes it is owed more than $1 billion in the Ever Given case.
General Average – Background
- Basic principle – “that which has been sacrificed for the benefit of all shall be made good by the contribution of all”.
- Applies to maritime claims only.
- Is declared by the captain when there is imminent danger to the vessel, voyage or crew.
- You are contractually obligated, via the Bill of Lading, for unknown and undetermined costs.
How does General Average work?
- Value of the voyage is determined (vessel value plus value of all cargo on the vessel).
- Participation in costs is determined by the percentage that the value of your cargo bears to the overall value of the voyage.
- The loss amount is determined, and participation percentage is applied, to the loss amount, to determine security deposit.
- Shipper/Consignee or their cargo insurer pay twice – first for the initial contribution, then for a bond covering future adjustments to that estimate.
- Freight may not be released until ALL deposits/payments have been received by all parties involved.
Difficulties of preventing and extinguishing fires on the open sea, which increases the likelihood of a General Average claim, include:
- Ships are larger with more varied cargo.
- Crew are ill equipped to deal with these fires.
- Fire-fighting tugs are often days or weeks away.
- Prevention is difficult, with rising problems with mis-declared cargo.
- IMDG Code is evolving to impose stricter rules on dangerous goods (DG.)
Problems Facing the Industry
- Stricter rules on Dangerous Goods cargo will lead to higher costs and more incentive on the part of shippers to avoid proper declarations.
- Ship owners and shipbuilders need to improve fire-fighting capabilities with CO² systems being shown to be inadequate – cost benefit analysis.
- National Cargo Bureau in NY found in 2017 that of 1,721 stowage plans inspected, 20% showed errors with DG.
General Average will (probably) never go away, so, keep yourself informed:
- Awareness across all business units that losses & delays are part of any supply chain. Mission-critical shipments need more risk analysis to determine transport mode.
- Understanding of what to do when General Average occurs. This is best led by your cargo insurance provider meeting with your ‘team,’ not just the risk manager or CFO.
- Have a contingency plan or at least an understanding of how the event will unfold.
MAKE SURE YOU ARE COVERED! Ask the questions. Do not assume.
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
ILA and USMX Reach Tentative Agreement to Extend Master Contract to January 15, 2025
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
Overnight a tentative agreement has been made between the ILA and USMX. As of this morning the ports are back to work. If you have any questions about your cargo please feel free to contact your local BOC representative.
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
International Longshoremen’s Association (ILA) Strikes Shutting Down East Coast Ports
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
Around midnight on September 30th the International Longshoremen’s Association (ILA) went on strike. With this strike, ports from Maine to Texas have ceased operations. This affects 36 ports along the United States east coast and marks the first ILA strike in close to 50 years.
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
Statement from the ILA:
International Longshoremen’s Association (ILA) Shuts Down All Ports On Atlantic and Gulf Coast On Oct 1st, As Strike Begins Against United States Maritime Alliance (USMX)
NORTH BERGEN, NJ. (October 1, 2024) The International Longshoremen’s Association shut down all ports from Maine to Texas at 12:01am on Tuesday, October 1, 2024, as tens of thousands of ILA rank-and-file members began setting up picket lines at waterfront facilities up and down the Atlantic and Gulf Coasts.
The ILA rejected United States Maritime Alliance (USMX) final proposal made on Monday, setting the stage for the first ILA coast wide strike in almost 50 years. The USMX last offer fell far short of what ILA rank-and-file members are demanding in wages and protections against automation.
“USMX brought on this strike when they decided to hold firm to foreign owned Ocean Carriers earning billion-dollar profits at United States ports, but not compensate the American ILA longshore workers who perform the labor that brings them their wealth,” said President Harold Daggett, the leader of the 85,000-member ILA union. “We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve.”
Even the leaders in Washington who encouraged the ILA and USMX to keep negotiations going up until the September 30th deadline, concluded on Monday that USMX and the greedy foreign companies they represent are only interested in protecting their fat revenues and not taking care of hard-working ILA longshore workers.
The ILA said USMX’s supposed wage increase offer fell far short of the demands of ILA rank-and-file members for them to ratify a new contract.
“USMX owns this strike now,” said ILA President Daggett. “They now must meet our demands for this strike to end.”
Contact: Jim McNamara, ILA. jmcnamara@ilaunion.org
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
Current reports are stating that the Biden administration does not plan to invoke the Taft-Harley Act. The USMX did propose a offer yesterday that would include a 50% wage increase along with other benefits but was rejected by the ILA.
The USMX is made up of 13 members and three separate sets of representation. The ports, shipping associations and ocean carriers make up board.
We here at BOC will continue to monitor the ongoing negotiations and will provide updates as they become available. If you have any questions in regards to how your business is being affected please contact your local BOC representative.
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
New Alliances in 2025 of Transpacific Trade
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
Hapag-Lloyd and Maersk have signed a new long-term operational collaboration called “Gemini Cooperation,” which will begin in February 2025.
ONE, HMM, and YML are expanding their global coverage through the Premier Alliance, adding over 80 direct port calls. This cooperation will also start in February 2025.
ZIM has entered into a long-term operational partnership with Mediterranean Shipping Company (MSC) for services between Asia and the U.S. East Coast, as well as Asia and the U.S. Gulf. These new services will launch in February 2025.
The Ocean Alliance will remain unchanged until 2032.
Below is the service map for Premier, Gemini, and ZIM & MSC for your reference.
…………………………………………………………………………………………………………………………………………………………………………….
ZIM & MSC Cooperation
Premier Alliance
Gemini Cooperation
……………………………………………………………………………………………………………………………………………
Canadian Government Intervenes
in Rail Stoppage, Proposed Strike in India
& Ocean Shipping Delays Worsen in 2024
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
Canadian Government Steps In
OTTAWA, Aug 22 (Reuters) – The Canadian government moved quickly on Thursday to end an unprecedented rail stoppage the same day it began, announcing it would send the matter to binding arbitration.
Canada’s top two railroads had locked out more than 9,000 unionized workers, triggering a simultaneous rail stoppage that business groups said could inflict hundreds of millions of dollars in economic damage.
Labour Minister Steven MacKinnon told reporters he was acting “in order to ensure that the activities of both of these rail companies immediately resume”.
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
Proposed Strike in India
Please find below an update on the proposed strike by port workers at major ports in India, scheduled to begin on August 28th, 2024. The affected ports include Deendayal (Kandla), Mumbai, Mormugao, New Mangalore, Cochin, Chennai, Ennore (Kamarajar), Tuticorin (V.O. Chidambaranar), Visakhapatnam, Paradip, Kolkata (including Haldia), and Jawaharlal Nehru Port (JNPT). Dry bulk vessel operations and cargo movement at adjacent berths will be the first to be impacted.
Please note that private terminals, including those operated by JSW and Adani at Kattupalli, Gangavaram, Ennore, Visakhapatnam, Dhamra, Paradip, Goa, and New Mangalore, will not be affected and will continue to operate as usual.
Additionally, on August 26th, a meeting will be held at Nhava Sheva. Following this meeting, the Nhava Sheva Terminal will decide whether to support the strike.
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
Delays in Ocean Shipping Worse in 2024 than 2023
(excerpted from container-news.com)
In May 2024, global schedule reliability saw a month-over-month increase of 3.8 percentage points, reaching 55.8%. This marks the highest reliability figure for 2024, surpassing the previous peak of 54.6% by 1.2 percentage points. However, compared to May 2023, schedule reliability was down by 11 percentage points (emphasis added).
Despite this improvement, the average delay for vessels arriving late worsened, rising by 0.34 days month-over-month to 5.10 days. This figure now approaches levels seen during the pandemic peak rather than the lower delays seen before the pandemic. Year-over-year, the delay in May 2024 was 0.73 days longer.
On a year-to-year level, none of the 13 carriers recorded an increase in schedule reliability, with eight carriers recording double-digit year-to-year declines, according to the analysis.
……………………………………………………………………………………………………………………………………………………………………………………………………………………….
