Union Pacific is temporarily suspending eastbound service from West Coast port terminals to its Global IV intermodal facility in Chicago to help ease “significant congestion” at inland terminals, especially Chicago, and at the ports.
UP (NYSE: UNP) hopes this suspension, which will start on Sunday and last for about seven days, will not only help relieve port backlogs for Chicago-bound container traffic but also ultimately help address backlogs for containers destined to other markets.
The suspension applies to UP-served terminals at the ports of Los Angeles, Long Beach and Oakland, California, and Tacoma, Washington.
“This week we reached out to the ocean carriers to take more positive steps to improve fluidity and throughput in the Los Angeles Basin and our Global IV facility in Chicago. … We believe this change will allow the transportation supply chain to begin working off the backlog of Global IV-destined trains while freeing up railcar assets to support import loading needs on the West Coast,” UP said in an advisory provided to FreightWaves. “We are working closely with the ocean carriers and collaborating wherever possible to improve the health of the supply chain.”
UP, along with other supply chain partners including Class I railroads, have been grappling with congestion at the West Coast ports as the economic recovery and robust e-commerce activity have kept U.S. import levels brisk.
Container processing at Southern California port terminals has increased while UP’s rail shipments to and from the ports “are near record highs,” UP said.
FreightWaves SONAR shows that intermodal outbound tender rejections, or outbound intermodal tender transactions rejected in the last seven days, grew in June after dipping to lows in March through mid-May.
The Intermodal Outbound Tender Rejection Index on outbound LA loads has surged from less than 2% in May to 11% as carriers have struggled to handle all contracted volume. (FreightWaves SONAR) To learn more about FreightWaves SONAR, click here.
Some shippers have expressed concern anecdotally about how the supply chain will handle fall peak, especially amid reports that containers have been waiting to move to multiple destinations for weeks, if not months. The reasons given for the congestion at the ports have ranged from chassis and labor shortages to railcar shortages.
UP said it recently held a symposium with ocean carriers in order to determine how to gate out boxes at inland terminals more quickly. From those efforts, UP has capped its storage fees at the Global IV facility for loaded units that are stacked and awaiting out-gate to help ocean carriers and drayage companies, and UP has opened its Global III facility as an interim import container storage location.
“We believe these positive steps will alleviate some of the considerable challenges supply chain participants are facing,” UP said.
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