Transportation news and analysis roundup

Compiled by Bruce Abbe, SSGA strategic adviser for trade and transportation

According to news reports out this week, rail service to the Port of Vancouver, British Columbia, may restart this week. Vancouver, one of the most used gateway ports for SSGA export shippers, was hit hard last week when a severe rainstorm with devastating flood waters and landslides took out rail lines in British Columbia between Kamloops in the interior and the port.

Canadian Pacific (CP) and Canadian National (CN) railroad crews have been working to repair sections of their rail lines that were washed out and caused disruptions at the port.

As of Monday morning, there were reportedly 47 ships at anchor off the Port of Vancouver, including six container ships, 12 coal ships and 19 grain ships.

Other updates from the Gateway Ports: 

Rupert: The Prince Rupert Port Authority posted on LinkedIn that the northern container port served by CN Railroad has not been impacted by the extreme weather and has remained fully operational. Moreover, the port said its terminals have the capacity to handle additional cargo. CN brings containers to and from Chicago, Indianapolis and western Wisconsin, including small container yards in Chippewa Falls and Arcadia, as well as a brand-new CN intermodal facility in New Richmond that serves the Twin Cities market.

NWSA: According to a weekly Gateway Performance and Outlook report last Friday from the Northwest Seaport Alliance, there were 11 ships at anchor or drifting in Puget Sound waiting to berth to unload and load cargo. That’s down slightly from the 14 or 15 ships that were waiting, according to reports from the previous two or three weeks. All 11 were waiting for a slot at the Seattle port’s busy T-18 terminal, which serves several ocean carriers. Other terminals, including Husky, Washington United and PCT in Tacoma and T30 in Seattle, reported no ships waiting for those berths.

Friday’s report also said that, as of Friday, there were 85 ships at anchor or drifting off Los Angeles and Long Beach and two off the Port of Oakland.

Los Angeles/Long Beach: News reports say that implementation of the somewhat controversial penalty fees on ocean carriers for import containers that overstay their allotted time at the Ports of Los Angeles and Long Beach was postponed last week – apparently because the threat of them is working.  

Port of LA Executive Director Gene Seroka said there has been progress in moving more overdwelling import containers off the terminals. The fees would start at $100 per container and increase daily for containers that dwelled on terminals nine days or more for trucked containers and six days or more for those to be moved via on-dock rail. The number of overstayed truck-moved containers dropped by 32%, and rail-moved containers dropped by 67% between Nov. 1 and Nov. 16.

The fees, which still could be implemented, were to be assessed to the ocean carriers. Carriers threatened to pass them on to shippers, and shipper interests have asked the Federal Maritime Commission (FMC) to clarify if any passed-on fees would fall under the FMC’s interpretive guidelines for detention and demurrage fees use. It could get thorny for ocean carriers to pass the fees on in situations in which import and export shippers don’t have ready access to moving their containers.    

Rail service improves
Container rail service from congestion-plagued BNSF Railway and Union Pacific Railroad to and from the West Coast has apparently improved, and the two big Class I railroads are no longer “metering” or restricting the number of containers they move inland to the U.S. Midwest.

“Additionally, our rail network and terminals are fluid with sufficient capacity to move more volume,” a Nov. 10 UP statement said. “Union Pacific is encouraging our customers to ship more IPI (international ocean containers shipped inland) volume from the West Coast ports by rail as a means of easing port congestion.”

There have been reports, disturbing for ag export shippers, that the ocean carriers and railroads have begun to restrict the number of IPI containers they will allow to go inland. Read more information from the Journal of Commerce.

How long?
Despite what any expert forecasts say about how long the supply chain congestion crisis will last, no one really knows with any certainty. But differences of opinion are cropping up.

Some analysts on industry virtual meetings have said the delays and capacity crunch could well last all the way through 2022 and into 2023 (some say even longer). However, it’s not a given that the congestion will last that long.

At the Global Shippers Forum held last week in Zurich, Global Shippers Forum Director James Hookham posed that rising consumer inflation, coupled with national central banks’ expected moves to raise interest rates, might not slow down the surge in demand for consumer goods shipped from Asia. Just about every shipping line is predicting that there will major congestion, he acknowledged, saying, “And why wouldn’t they when they are collectively expecting to turn profits exceeding $150 billion this year? But there is good reason to query the hype of continues congestion.”     

The carriers are or will be engaged in contract negotiations soon with large shippers. More details at Journal of Commerce. 

Respected intermodal analyst Lawrence Gross, president of Gross Transportation Consulting, told the American Journal of Transportation that he sees a migration of ocean carrier sailings and  cargo from the busy dominant U.S. ports of Long Beach and Los Angeles to East Coast ports. Gross said he is seeing signs that congestion will east.

What about rates?
Another prominent international research and data firm, Denmark-based Sea Intelligence, is forecasting that higher rates for container shipping could continue for as long as 18-30 months before returning to normal. They based their examination on historical patterns and data from the composite China Containerized Freight Index. Container News has more detailed coverage.

Impact on American farms 
The continued harmful impact of the supply chain and port service crisis on key sectors of the U.S. economy, particularly on U.S. agriculture exports, is not lost on industry leaders. The New York Times carried a major feature story by on Nov. 14 about how the “Crunch at the Ports May Mean Crisis for American Farms.” You can read the full story here.