Los Angeles-Long Beach handles some 40 percent of U.S. containerized imports, but what happens to that cargo once it lands is undergoing fundamental change, reflecting larger trends in U.S. freight transportation.
The main point is rail’s growth in popularity overall as a means of moving goods imported through LA-Long Beach, and other ports, to markets in the U.S. interior.
But the nature of how goods move by rail is changing. Three numbers stand out: Goods shipped eastward by rail from the Southern California ports represented 67 percent of all imports in 2012, up from 62 percent in 2006, according to the Alameda Corridor Transportation Authority, using data from rail equipment supplier TTX. This reflects importers’ choosing rail over more expensive trucking and underscores the larger trend of shippers choosing slower, less expensive transportation options such as moving goods by ocean instead of air freight.
Increasingly, however, goods aren’t moving east from LA-Long Beach packed in the ocean containers they arrived in from Asia. Since 2006, when 3.4 million containers imported into LA-Long Beach moved into the U.S. interior via rail — the high water mark — the number of ocean containers moving inland by rail has declined steadily to only 2.6 million containers in 2012, down 23 percent over the five-year period.
However, goods imported into LA-Long Beach but then transloaded into domestic containers and then sent east by rail have increased 25 percent since 2006. Without question, the data shows shippers are increasingly choosing transloading over intact containers to move imported goods to interior consumer markets.
“I’m not surprised by those numbers at all,” said John E. Wagner Jr., president of Kansas City-based Wagner Logistics. There are several reasons why it makes sense that transloading is growing, he said. One is that 40-foot containers have limited utility in the interior. Because ocean carriers ultimately need their containers back on a ship whether empty or filled, a container that lands in, say Dallas, can’t be reloaded and sent to Chicago or Atlanta, or at least it doesn’t make a lot of sense to do that, because that doesn’t get it any closer to a port.
“Once the trailer gets inland, it is easier to reuse than a container; it’s easier to find another load for an intermodal trailer versus a 40-foot container, unless it’s loading export cargo. A trailer can go just about anywhere, but a container has to stay in the international trade lanes,” Wagner said.
Chassis are another issue. With ocean carriers withdrawing from providing chassis for 40-foot containers at most inland locations, chassis are harder to find at inland hubs. “If you take a container inland, you have to come up with a chassis for it; that has become more of a problem as steamship lines have pulled out of offering chassis,” Wagner said. “The industry is reacting to that by creating neutral pools, but it’s still a challenge.”
Another issue with chassis is the impact of the new CSA driver safety regulations: Truckers will be reluctant to haul a chassis if there is any question as to its maintenance status, and there often is. “Under today’s hypersensitive safety culture, I’m not saying that’s a bad thing. The old chassis pools that the steamship lines operated weren’t exactly well-maintained and no driver wants to get caught on the highway with an unsafe chassis, because it dings their safety score.”
The trend toward containers not moving inland reflects ocean carriers becoming more port-to-port operators and agreeing to ship containers inland only to support inland port logistics models preferred by major customers such as Wal-Mart.
Intact containers moving inland will likely always be a part of the mix, but over time, their numbers will be smaller.