West Coast Ports Struggle with Landside Congestion

Severe congestion is on the rise again at major gateways along the West Coast, and fears are mounting that terminals will soon run out of room to accommodate incoming cargos.

In the San Pedro Bay, container dwell times have increased from 3.5 days in January to 7.4 days at the end of March due to the lack of chassis and rail equipment.  The pileup of containers has crippled port productivity, resulting in extended berth times, prolonged anchorage times, and increased demurrage and detention (D&D) costs for shippers.  And the problem isn’t just confined to Los Angeles and Long Beach – Oakland, Seattle, and Tacoma have also reported a sharp increase in container dwell times and mounting congestion.

The problem is attributed to a discrepancy between import growth and available rail equipment.  Despite the sharp increase in container volumes at the major West Coast gateways, rail operators Union Pacific (UP) and Burlington Northern Santa (BNSF) have been slow to bring in more rail cars and locomotives.

Many have accused the rail companies of being reluctant to move more equipment and rail cars to the West Coast to make up for the shortfall of capacity in order to profit off the supply chain congestion.  A recent report issued by Accountable.US concluded that Class I rail companies raised fees last year while seeing a reduction in operating costs.  According to the report, they limited or suspended service offerings while collecting D&D fees to boost their soaring profits.  They also lowered operating expenses by trimming fleets and employee numbers, and instead of investing in service improvements, equipment, and infrastructure, they spent millions on stock buybacks, dividends, and lobbying activities.  While complaints from BCO’s have prompted Washington to get involved, the issue continues to loom, mirroring the clash with containership lines.

The issues caused by the beleaguered rail companies aren’t just affecting the West Coast.  There have also been signs of congestion at major inland rail hubs.  In a recent advisory BNSF told customers, “Major service interruptions during the past few months, particularly in Southern California as well as along our Southern Transcon route through the south-west and into the central plains, also impacted velocity and our ability to effectively align resources with freight volumes.”  The need for additional crews is also prohibiting recovery efforts.

The problems on the West Coast have been further exacerbated by the U.S. trade imbalance, which continues to worsen.  Because there’s so much consumer demand for imports, and carriers are able to charge substantially more to bring in goods from Asia, vessels are leaving American ports empty.  As a result, export containers are taking more than twice as long to move through the ports are import containers and continue to pile up, adding to the yard congestion.