Record imports at West Coast ports over recent months are causing congestion on rail networks as holiday and everyday goods accumulate. Nearly half of the containers destined for freight rail from the Port of Los Angeles are experiencing delays of over nine days before being transported. Prior to container surges in August and September, the average rail dwell time for the San Pedro Basin, which includes the Ports of Los Angeles and Long Beach, was four days.
In September, the Port of Los Angeles handled a total of 954,706 twenty-foot equivalent units (TEUs), setting a new record for the month. Gene Seroka, the port’s executive director, informed CNBC during a monthly cargo briefing that 20,000 rail containers are currently awaiting loading. He is in daily discussions with railroads to address the increased dwell times, although he emphasized that rail congestion is not affecting vessel and trucking operations at the port. Seroka stated, “This is not impacting port operations,” and highlighted that railroads remain a central focus.
Seroka is observing three key factors related to future container growth and the port’s capacity to efficiently manage cargo: an early Lunar New Year, the U.S. presidential election, and the robust economy, as indicated by recent port volume data. October is projected to be another strong month, with the port anticipating mid-800-thousand TEU numbers. The prospect of tariffs might drive an increase in early cargo to avoid additional costs, contingent on the presidential election results and the decrease in unemployment claims.
Meanwhile, at the Port of Long Beach, rail dwell times are averaging seven days, though the port is not experiencing operational congestion, according to executive director Mario Cordero. With a historic number of TEUs moving through the port over the last three months, the current rail dwell times do not raise immediate concern. In September, the Port of Long Beach processed 829,499 TEUs, marking the fourth consecutive monthly year-over-year cargo increase, largely driven by holiday-related products.
Retail and chemicals sectors have expressed concerns about this situation. Matt Shay, CEO of the National Retail Federation, projected strong holiday sales for the rest of the year, with winter holiday spending expected to grow between 2.5% and 3.5% over 2023 levels. He noted that retailers are well-prepared in terms of inventory. Meanwhile, the Alliance for Chemical Distribution highlighted that the Ports of Los Angeles and Long Beach are essential for distributing key chemicals from China.
Logistics managers report that the average dwell time for containers moving from vessel to rail is about two weeks at the Los Angeles and Long Beach ports, with some cases extending to four weeks. Paul Brashier, vice president of global logistics at ITS Logistics, mentioned ongoing contingency plans to mitigate potential rail disruptions by unloading rail ocean containers directly onto trucks for further inland transportation, bypassing initial rail terminals.
Freight rail lines have responded to record volumes. Union Pacific has employed a resource buffer to handle increased intermodal volumes from the ports and is collaborating with customers to manage container flows. BNSF reported a half-year record for on-dock volumes and noted that disruptions such as rerouted volumes and a lithium battery fire have impacted operations. The company is making efforts to accommodate record volumes with investments in infrastructure capacity and scheduling full-length westbound trains.
Shipping customers have expressed worries over increased rail dwell times at West Coast ports, according to supply chain executives. Geotz Alebrand of DHL Global Forwarding advised clients to consider alternate strategies, such as rerouting to East Coast ports, to alleviate shipping delays exacerbated by ongoing labor negotiations. Rail companies like Norfolk Southern and CSX, which primarily operate on the East Coast, have benefitted from dealing with rerouted containers from the West Coast during COVID-19 to avoid delays.
