Ocean carrier MSC reports that U.S. freight railroads have started to reduce import rail traffic at the ports of Los Angeles and Long Beach as well as New York as the U.S. experiences record import volumes.
Starting last Sunday and effective for the next two weeks, MSC rail vendor BNSF (NYSE: BRK.B) is metering inbound trains at ocean terminals at LA and Long Beach, MSC said in a Monday morning service advisory.
As a result, delivery of onboard or discharged cargoes to Chicago will be impacted since cargo will be held at marine terminals until the restriction is lifted or “abated,” MSC said.
“Any change in destination may prove difficult given these challenging circumstances,” MSC said. BNSF didn’t place these restrictions at the ports of Oakland, California, and Tacoma, Washington, MSC added.
BNSF confirmed that it was metering traffic from the West Coast as a way to manage traffic flow.
“The rate of containers tendered to us on the West Coast continues to exceed the rate of out-gates from Logistics Park Chicago,” BNSF told FreightWaves. “We are confident in our ability to process and unload volume at the rate that we are seeing demand on the West Coast, provided that there is adequate capacity to receive and out-gate that volume at destination. We are still seeing low rates of out-gate — particularly on weekends.”
BNSF continued, “We continue to engage on a number of targeted efforts with our core ocean carriers, beneficial cargo owners and the local dray community to work together on this challenging supply chain issue.”
MSC also noted on Monday that since last Sunday, an unnamed MSC rail operator has begun metering traffic coming from New York to three Midwestern destinations: Chicago, Cleveland and Indianapolis.
“If [the] current scenario does not improve, these temporary measures may very well spread to other ramps,” MSC said. It added that it would pass on any updates from the rail operator.
CSX’s (NASDAQ: CSX) network connects to those locations, but the railroad didn’t respond to a request for comment. However, on Sunday, the railroad in a service advisory said damage from a severe thunderstorm impacted rail operations on CSX and connecting railroads in and out of the North Jersey Terminal.
“Traffic is being rerouted where possible, but delays can be expected for shipments moving to and from the New Jersey gateway. Your patience and understanding are greatly appreciated as CSX teams are working around the clock to restore normal operations,” CSX said Sunday. The railroad is reporting its second-quarter 2021 earnings after the market closes on Wednesday.
Reports that the railroads are restricting inbound ocean container traffic from the busy LA/Long Beach area and New York follow Union Pacific’s (NYSE: UNP) actions last week to temporarily suspended international container movements from the West Coast ports to Chicago for one week to reduce backlogs at Chicago as well as at the ports.
Anecdotally, a shipper importing goods told FreightWaves that the shipper’s containers haven’t been picked up in over a month amid backlogs at LA/Long Beach.
Those backlogs could set the stage for price inflation, according to witnesses at a congressional hearing last week.