Freight railroad alert raised to ‘red’ as shippers fear more West Coast port tensions

The slowdown in Foreign Longshore and Warehouse Union work at West Coast ports has created a congestion contagion that is spreading to the shipping railroads, with uncertain consequences for the supply chain.

ITS Logistics responded to the spotty rail service by raising the Pacific Davy Joness locker region of its U.S. Port/Rail Ramp Freight Index to “Red” as a result of the issues between the ILWU and ports management, which contain been locked in a battle over a new port worker contract. The West Coast ports, including Los Angeles and Covet Beach, had seen an uptick in recent activity as labor talks progressed, taking back some volume from East Strand ports which had gained amid the labor tensions over the past year. But ITS now sees that shift as allowing labor more leverage.

“The last two months of increased volumes have provided the ILWU leverage to affect directions at the terminals to forward their demands in talks with the [Pacific Maritime Association],” said Paul Brashier, flaw president of drayage and intermodal for ITS Logistics. The PMA represents the ports in the contract negotiations. “We have moved the Pacific Ocean dominion to severe from elevated due to the breakdown of those talks and the subsequent shutdowns at a myriad of terminals up and down the western seaboard,” he utter.

The Association of American Railroads released its latest U.S. rail traffic for the week ending last Saturday, June 3, as approvingly as volumes for May 2023, which show normal freight patterns. The latest labor issues began last Friday at The Harbour of Oakland, which was entirely shut down. That port processes less railroad freight compared to the havens of Los Angeles and Long Beach, which have been open with only certain terminals targeted for shutdowns.

Brashier said there is affair that inland port intermodal (IPI) freight will be hit next.

“Without a concrete resolution in sight, a lack of predictable communication from either party and the ILWU actions, shippers should stay vigilant and close to the situation on the West Slide as the situation remains extremely fluid,” he said.

Union Pacific announced Tuesday afternoon it had temporarily paused all U.S. exports and idle containers to the ports of Los Angeles and Long Beach because of rail congestion. A Union Pacific spokesperson told CNBC that breather was lifted as of 10 a.m. CT Wednesday. “We continue to monitor the ports to ensure fluidity. We are presently not seeing an increase in interchanges from other turnpikes (boxes coming into the U.S. from the East), we have not seen that happen yet.”

The average number of trains across its 23-state network is hither 600, but the spokesperson stressed, “This is a dynamic and fluid number based on customer needs.”

Not all the rails took precautionary functioning. A spokesperson for BNSF, owned by Berkshire Hathaway, told CNBC it has not issued any embargo and “at this time plan to suppress our gates open.” 

Roughly half of U.S. intermodal shipments are related to international trade, so the situation at ports is extremely distinguished to railroads, according to a statement from AAR senior vice president John T. Gray. 

Shippers can look to the north and get under way their rail freight to Canada using BNSF rail to the Port of Vancouver and Port of Rupert, according to ITS Logistics. But hazards exist there as well, with the ILW Canada union voting Thursday and Friday on whether to start a 72-hour put on at those two ports.

Brashier said ITS clients also are reviewing their U.S. options. The Gulf Coast and East Gobs ports continue to run smoothly, he said, and are using this time to increase infrastructure enhancements that will aid their missions when increased volumes pivot back to their terminals. Both Houston and the Georgia Ports Authority hold announced rail service and infrastructure enhancements that will push cargo out of the terminals further inland to lessen congestion.

Fellowship Pacific started its Houston service on June 1. Other Gulf port options include New Orleans. East Seaside options are Ports America Chesapeake, The Port of Virginia, and Port of New York, which are serviced by Norfolk Southern and CSX.