(The following story appeared at CalTradeReport.com on July 20.)
LOS ANGELES — A groundswell of containerized imports from Asia and a US economy that’s grown by 4% in the first half of the year are having a severe impact on the ability of the West’s largest rail carriers to move cargo from California eastward to inland US transshipment points.
According to reports, both the ports of Los Angeles and Long Beach are increasingly concerned that container cargo is accumulating at their terminals because the rail car allocation system implemented by the Union Pacific Railroad (UPRR) and Burlington Northern Santa Fe Railway (BNSF) – the region’s two primary rail carriers – isn’t moving cargo through the supply chain quickly enough.
Under the system, shippers must request a shipment in advance. The railroads then allocate a certain number of rail cars to each port or rail yard to make the pickup.
Rail traffic “doesn’t seem to be moving fast enough” to keep up with the requests, said a spokesman for the BNSF.
According to the US Surface Transportation Board, the federal agency that regulates rail carriers, the UPRR’s inability to handle the increased cargo load is based in the carrier’s moves last year to reduce employment and equipment purchases last year to cut costs.
As a result, the agency said, the railroad “hasn’t been able to catch up with the fast-growing economy.”
In response, the UPRR said the Omaha-Based railroad expects to hire 5,000 new train-service workers this year and is purchasing locomotives at an accelerated rate.
However, the new employees need four to six months of training before starting work.
“Business is very strong, and demand is more than we can handle at this point,” a spokesman for the company said.
Nationally, reports the Washington, DC-based Association of American Railroads (AAR), railroad cargo shipments climbed 6% through June and are headed for a record high levels by the end of the year.
But, the industry group said, current congestion on the lines across the country, as well as on the UPRR and the BNSF, caused average train speeds to fall almost 7% during the first half of the year.
Union Pacific and Burlington Northern said recently that idle times for trains at intermodal facilities in Barstow in Southern California and Roseville, near Sacramento, are longer this year because larger loads and staff shortages have made it harder to switch crews or to add or remove cars.
The UPRR has said it plans to increase rates for intermodal shipments by 9.5% beginning August 17 with the BNSF making a similar rate increase starting on the same date in part to help both carriers improve their service profile to handle the surge in container cargo.
The increase will reportedly boost the cost of moving a 40-foot container out of California by rail to about $95.
The largest railroad operating in the eastern US, CSX Transportation – which connects with both the UPRR and the BNSF to provide transcontinental intermodal rail service – has plans to purchase 120 additional locomotives and has said it will hire 1,400 more train and engine service employees this year.