Los Angeles port boss: Fix rail service or risk ‘nationwide logjam’

The Port of Los Angeles, the largest container gateway in America, reported another month for the record books in June. It also highlighted a major risk to the country’s supply chain if rail service is not improved.

The shortfall of rail service to handle import cargo — which is causing more containers to pile up at terminals for longer — is front and center, affirmed Gene Seroka, the port’s executive director.

“All eyes are focused on improving the rail product. Full stop. The bottom line is that we must take action on this issue immediately to avoid a nationwide logjam,” he warned during a press conference on Wednesday.

Best June ever for Los Angeles throughput

The port reported 876,611 twenty-foot equivalent units of total throughput for last month, making it the highest-performing June in its history. Total throughput was up less than 1% year on year (y/y) but up 15% versus the prior five-year average for that month. Exports came in at 93,890 TEUs, down 2% y/y, with 338,041 empty containers shipped, up 8% y/y.

There were 444,680 TEUs of imports, down 5% y/y but up 12% from the trailing five-year average. It was the second-best June on record for imports.

June imports were down 11% sequentially — by 55,280 TEUs — from imports in May. However, ships with a total capacity of 91,664 TEUs were waiting in Los Angeles’ offshore queue at the end of June.

Asked whether the decline in June versus May was due to rail issues that limited terminal capacity to unload ships faster, Seroka replied: “If we’re not moving in sync, we’ve got to handle containers more than once and that takes time and money and it takes efficiencies out of the system. So, if we have these 20,000 aging rail containers [dwelling nine days or more] on the ground, sure, it causes problems.”

Terminal congestion ‘nowhere near’ Q4 ‘dire straits’

But Seroka maintained that current conditions “are nowhere near the inundation of containers on these terminals in the fourth quarter [of 2021]. I don’t see us in the dire straits I witnessed last year ahead of the holiday season.”

He emphasized that the total number of import containers on the port — 71,013 as of Wednesday — was down 25% from peak levels in late October. (However, port statistics show that that there haven’t been this many import containers in Los Angeles since Nov. 10.)

Seroka also stressed that long-dwelling containers are now mostly bound for rail transport, which was not the case in Q4 2021. “The rail cargo sitting nine days or longer now makes up 75% of all our aging cargo, which is why I’m advocating that we need to kick it into gear to get this problem solved.

“Everyone has a role to play. Cargo owners must pick up their boxes at inland rail terminals faster than they are today. The railroads need to get crews and engine power and rail cars back to the West Coast faster. And the marine terminals, shipping lines and ports need to provide key data to help prioritize the evacuation of this cargo.”

Peak season should be ‘strong’ but ‘tapered’

Seroka remains confident on peak season import volumes despite macroeconomic headwinds from inflation and inventories.  

“Even though some retailers have high inventories and may look to discount goods, I expect imports to remain strong — although a tapered version of last year,” he said.

“The volume you’re seeing coming through right now was ordered about three or four months ago. The cargo that’s going to come over during the next couple of months is going to look different.

“Looking at the back half of the year, we’ll be seeing back-to-school, fall fashion, Halloween and the all-important year-end holiday goods coming across the Pacific,” he said.

“During the pandemic, we saw many Americans buying goods they don’t normally buy. A new couch. A new refrigerator. In my case, I picked up golf again and bought new clubs. It really didn’t help my game. We were spending on goods we don’t necessarily repeat buying. So, you’ll start to see those level off but other [buying] will continue.”

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• Los Angeles port: Peak season coming soon, strong imports ahead
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Source: freightwaves - Los Angeles port boss: Fix rail service or risk ‘nationwide logjam’
Editor: Greg Miller