Union Pacific, BNSF hike intermodal rates

Union Pacific, BNSF hike intermodal rates

LOS ANGELES -- With the peak shipping season at hand, the Union Pacific and Burlington Northern Santa Fe railroads are raising intermodal rates from the West Coast.

The increases come as importers continue to experience delays on rail lines and at intermodal transfer yards. Also, terminal operators in Los Angeles-Long Beach are beginning to complain that rail restrictions on tendering shipments, known as allotments, are causing containers to back up in the port complex.

Union Pacific spokesman John Bromley said the railroad's increase of approximately 9.5 percent, scheduled to take effect on Aug. 17, will last throughout the peak shipping season. At least some of the increase will most likely be rolled back when volumes drop off in January. The UP imposes a peak season surcharge every year, he said.

Burlington Northern Santa Fe describes its rate increase as a domestic peak season surcharge, and it will likewise take effect on Aug. 17.

The percentage increases vary among the different trade lanes, said BNSF spokesman Dick Russack, so the rail carrier is quoting the rate hikes in dollar terms. For example, the rate increase from the Pacific Northwest to BNSF direct destinations is $45 per container or trailer, and $95 from California.

BNSF's rate increase from California to rail interline partners is $170 per unit, and $120 from the Pacific Northwest.

Cargo volumes from the West Coast remain strong and are expected to accelerate during the busy summer-fall peak shipping season. Through May containerized imports from Asia were about 10 percent higher than the year-ago period at West Coast ports.

This is a difficult year for the railroads as they grapple with unexpectedly high cargo volumes and, in the case of UP, equipment and labor shortages.

Union Pacific has been experiencing delays of one to two days on its network. The Omaha-based company earlier announced that it will initiate an allotment system in which it will limit how many intermodal containers it accepts each day from shipping lines. Bromley said the details are being worked out with customers individually.

The railroad last week announced other service cutbacks designed to ease congestion on its system.

In June BNSF implemented an allotment system, and terminal operators in Los Angeles-Long beach say they are not pleased with it. Normally, intermodal shipments remain on the docks less than a day, but with the allotments, containers are remaining in port longer than that. This contributes to congestion at the terminals, already struggling with a shortage of longshore labor.

Russack said BNSF has not received any complaints from shipping lines and terminal operators about the allotments.

Although May was one of the busiest months ever in Los Angeles-Long Beach, shippers and carriers are concerned that congestion problems will be even worse as back-to-school and holiday season merchandise pours in from Asia.