MSC warns of impacts of international multimodal transport on the West and East coasts in the US

Transporting containers by rail (Photo: WSJ)

The shipping line MSC reports the rail lines are handling large volumes of cargo at ports in Los Angeles and Long Beach as well as New York.

MSC said that US rail lines have begun to reduce rail traffic for imported goods at the ports of Los Angeles and Long Beach as well as New York when the US records a record increase in import volumes.

Beginning last Sunday and lasting for the next two weeks, BNSF (NYSE: BRK.B), the company that provides rail transit services to MSC, will control train traffic to ports in the Los Angeles and Long Beach, MSC said in consulting services Monday morning.

As a result, shipping on board or unloading to Chicago will be affected as the cargo will be held at seaports until restrictions are lifted or "removed," MSC said.

Any change in destination could be difficult during this time, said MSC. BNSF does not place these restrictions at the ports of Oakland, California and Tacoma, Washington, MSC added.

BNSF confirmed that it is controlling 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. And, "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 continues, “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.”

The volume of domestic intermodal containers shipped to Chicago (Image: FreightWaves SONAR)

This SONAR chart shows that domestic intermodal container volume shipped to Chicago (in blue) is now down about 10% from this time last year (yellow).

The MSC also noted on Monday that as of last Sunday, a rail operator - who declined to be named - had begun controlling freight traffic from New York to three Midwest destinations Chicago, Cleveland and Indianapolis.

“If the current situation does not improve, these temporary measures will most likely spread to other train stations,” MSC said. MSC added that it will regularly update information obtained from the railway operator.

Railroad company CSX (NASDAQ: CSX) is connected to those locations, but the company did not respond to requests for comment. However, on Sunday, a rail service advisor said damage from a severe thunderstorm had affected CSX's rail operations and connecting rail lines in and out of the Station North Jersey.

“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.

Reports indicate that railroads are restricting ocean freight container traffic coming from the busy Los Angeles/Long Beach area and New York following actions taken by Union Pacific Railroad Corporation (NYSE:UNP) on last week to suspend international container shipping from West Coast ports to Chicago for a week to reduce backlogs at Chicago and at ports.

An importer of cargo told FreightWaves that the shipper's containers have not been received for over a month due to a backlog in LA/Long Beach.

And, those backlogs could set the stage for price inflation in the near future.

Read more:

• Container supply chain disruptions could affect shipments until Christmas
   

Source: Phaata.com (According to FreightWaves)

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