North American intermodal volumes plummet in runup to West Coast settlement

North American intermodal volumes plummet in runup to West Coast settlement

North American intermodal volumes plummeted as U.S. West Coast port congestion came to a head last week before union and waterfront officials at last brokered a deal Friday evening.

Intermodal traffic on U.S., Canadian and Mexican rail networks dropped 32,049 units last week, down 13.3 percent year-over-year, according to the Association of American Railroads. In the U.S. alone, weekly intermodal volume dropped to 213,617 units, down 15.7 percent year-over-year.

The numbers mirror projections U.S. railways have made as they continue to face challenges moving goods to and from U.S. Pacific coast ports during the nine-month-long labor dispute between the International Longshore and Warehouse Union and waterfront employers. The standoff hammered intermodal volumes in its final days last week before both sides agreed to a settlement Friday under pressure from Labor Secretary Tom Perez who had been sent by President Obama to obtain an agreement.

Even in the aftermath of a settlement, though, industry experts agree it will take months for Los Angeles, Long Beach, Oakland, Seattle and Tacoma — all among the 10 largest ports in the U.S. — to return to “normal” operations.

With marine terminals easing back into productivity, Western railroads Union Pacific Railroad and BNSF said they are taking steps to handle an expected increase in international intermodal traffic after cutting back on service during the worst of West Coast congestion.

UP has deployed additional locomotives, railcars and train crews, and in coming weeks will “provide unit trains for high-density terminals to improve turn times, and facilitate higher train counts and longer trains,” spokesman Elizabeth Hutchison said earlier this week.

BNSF Railway said it will undo westbound container restrictions that have been place at some ports to match the increased production capabilities of corresponding marine terminals, spokesman Amy Casas told JOC.com. Because of the large cargo backlog for cargo headed in both directions, “changes are not expected to be sudden or large scale,” she said.

Congestion resulted in “year-over-year reductions in BNSF’s eastbound train counts as much as 20 to 30 trains a week carrying a minimum of 250 containers that are not being processed through the supply chain," Katie Farmer, the railroad’s group vice president of consumer products, told a Senate Commerce subcommittee on Feb. 10. UP told investors during its fourth-quarter earnings call on Jan. 24 that it also lost international volume because of port congestion.

For some time it has appeared that U.S. rail’s loss was Canada’s gain. But the latest numbers show signs that even Canadian intermodal volumes have taken a hit.

As terminal shutdowns and alleged union work slowdowns in the midst of the drawn-out negotiations left ships waiting to berth at U.S. ports for weeks on end, many vessels were eventually diverted to ports further north.

But even the Canadian rail networks, embroiled in their own union contract disputes in recent weeks, saw volumes drop last week. At 50,580, intermodal, volumes were down 4.7 percent year-over-year on Canadian rail. This just days after weekly intermodal traffic appeared to be on the rise, increasing steadily through the first four weeks of the year and jumping 7.6 percent, or some 4,200 units, in the second week of February.

Mexican weekly intermodal volumes were down too, dropping 1.9 percent year-over-year.

Contact Reynolds Hutchins at rhutchins@joc.com and follow him on Twitter: @Hutchins_JOC.