The only constant is change

The only constant is change

Prince Rupert, Lazaro Cardenas, Savannah, Charleston, New York-New Jersey, Suez, Panama Canal. These ports and canals are options for manufacturers and retailers concerned about congestion on the usual routes for moving freight from Asia to the U.S. They demonstrate that change is the only constant in the intermodal supply chain.

It's no secret that Los Angeles and Long Beach face serious congestion, although this year may be an exception. But the huge Southern California port complex faces more than just congestion. It is under pressure to reduce environmental degradation in surrounding communities. Draconian measures are under consideration.

Harbor drayage trucking companies are supposed to apply for concessions that will allow them to operate in the harbor. They will be required to buy new, low-polluting diesel trucks and hire drivers to operate them - a sharp contrast from today's system in which independent owner-operators lease themselves and their vehicles to the drayage companies.

Facing congestion and fear of higher operating costs, shippers are considering alternatives. And when shippers look for alternatives, the ship lines will not be far behind. After all, they are in the business of satisfying customers, not just transporting containers. That may come as a surprise to some ship lines, but it shouldn't. It's what happens when supply and demand are just enough out of balance to give customers leverage.

Intermodal always is in a state of flux. In an effort to drive the traffic density needed for profitable operations, Maersk, the largest container shipping line, ended point-to-point service to a number of lower-density inland U.S. points this year. Other operators were ready and willing to serve Maersk customers who did not want to change distribution channels.

Maersk's decision seems to have affected BNSF Railway, the industry intermodal leader, because BNSF handled more domestic haul for Maersk than did Union Pacific, BNSF's western rival. Weekly traffic data show BNSF intermodal volume down while UP's is up. Customers inconvenienced by Maersk have taken their business to other ship lines that have contracts with UP.

BNSF and UP face pressure to invest millions to increase capacity. BNSF is completing the double-tracking of its Chicago-Los Angeles Transcon route. UP has accelerated double-tracking of its Sunset route between Los Angeles and El Paso, Texas, and has invested large amounts in the Golden State route from El Paso to Chicago and the direct Texas Pacific route between El Paso and Dallas, which allows it to offer improved service to the Southeast.

Importers are resisting rate increases that reflect sharply rising rail rates on through bills of lading. Huge container ships entering service on trans-Pacific routes to the West Coast free older vessels that still can transit the Panama Canal. The canal is being enlarged and in a few years will be able to accommodate larger ships.

As Panama Canal volume increases, East Coast ports will see more imports from Asia. At the same time, changing economics make direct service to the East Coast via the Suez more attractive. Meanwhile, Canadian National Railway begins intermodal service next month between Prince Rupert, British Columbia, and Chicago and Toronto. Kansas City Southern de Mexico already offers intermodal service between the U.S. and Mexico's Lazaro Cardenas, a route that serves the Mexican industrial heartland around Monterey.

These changes do not please BNSF and UP, which regard intermodal as their bread and butter. But they undoubtedly please Norfolk Southern and CSX, which now can anticipate originating a flow of westbound traffic to the Midwest rather than having to rely on BNSF and UP for interline traffic.

Some changing patterns reflect the failure of federal, state and local governments to fund congestion-relieving highway projects. California may tax containers for environmental mitigation and to increase highway capacity. But the mayor of Los Angeles wants funding to rebuild two bridges serving the port, while the governor of California does not. Stalemate.

Stalemate is not acceptable. Intermodal transportation grew over the past two decades because of its flexibility. Shippers and receivers want their freight moved from origin to destination with as little fuss and muss as possible. That will not change. In intermodal, at least, change is a constant.