Freight Report: Hot Mess
Reporter's Notebook: July 14, 2023
Welcome Please Haul My Freight: Edition 45. Here are some items in my notebook this week:
CANADIAN PORTS: A tentative deal has been reached on a four-year agreement to end the ILWU strike covering West Coast Canadian ports. But Week 27 volume was impacted by the strike, according to the Association of American Railroads:
I spoke to an NVOCC contact who said her cargo between Chicago and Winnipeg has been delayed, as are many other Western Canada inland locations:
“I have loads going to Winnipeg and it's been sitting in Chicago for like a week. The rails tell us it’s due to the ILWU issue in Vancouver and Prince Rupert, causing rail cars out of place, so therefore, departures are being delayed.”
With the tentative agreement, hopefully the mess will be untangled soon. Paul Brashier, vice president of drayage and intermodal at ITS Logistics, explains how long he thinks it will take:
“My rule of thumb when we deal with stuff like this is for every week that a port is shut down, it's about three to four weeks to untangle it. So I'd say it’ll take six to eight weeks to get back to normal.”
The best analogy someone gave to me was an aviation. When there is a major storm shutting down airports in one region, it tends to spread across the network. Planes are not in the right location. Pilots are stranded in the wrong location. Passengers who are on canceled flights are rebooking once the situation clears. Planes and airports are jam-packed when flights resume and it takes time to unclog the network.
In this situation, trains are going to be filled with the backlog of two weeks of cargo. Many of those containers will end up in Chicago, Detroit, and Memphis, and arrive in bursts, which could overwhelm the terminals and chassis supply.
For shippers, there is a chance of demurrage penalties simply because there aren’t enough drivers or chassis to remove the deluge of containers all at once.
Ultimately, it works itself out, but it might be rough for a few weeks, particularly in Chicago.
CHASSIS SHORTAGES: As I wrote about this week, there is a marine chassis shortage in Chicago. The issue should be resolved within the next two weeks, but it’s important to monitor this issue with DCLI and TRAC because of the containers coming from Prince Rupert and Vancouver into CN Harvey and CP Schiller Park in the Chicagoland area.
For full disclosure, I want to share DCLI’s full statement, and notes from my conversation TRAC. It’s important for people to read everything DCLI and TRAC shared on the situation in Chicago:
“DCLI’s marine chassis street usage in the Chicago market is down by more than 30% versus this time last year and dwell has declined nearly 20%. Both of these stats show that after two plus years of pandemic-driven volume, we are now able to plan more related to our pool inventories rather than simply react to market factors. As these chassis start to come back to us after the heavy usage of the recent past, we have seen out-of-service levels (OOS) increase as these units are sent for needed maintenance and refurbishment.
The chassis in stacks at depots are a result of OOS chassis being moved off rail ramps to 1) save space, 2) expedite repairs, and 3) reduce the impact of containers being mounted on an OOS chassis and eventually having to be flipped to a good order chassis, resulting in further delays for the motor carrier.
These units are constantly down stacked for repair and release to the trucking community – on average, ~1,200 chassis out-gate bare from our Chicago depots each week. Year to date, we have repaired ~15,600 chassis in the Chicago market and the pace of those repairs is increasing month-on-month. We have also added ~400 newly refurbished chassis in this market’s pools over the past three months. We continue to work closely with our vendors to ensure that chassis are available to our customers in Chicago and other markets across the country.
Motor carriers who have questions about chassis availability in Chicago can contact Dclchasmwr@dcli.com.”
Val Noel, COO of TRAC, on why there are no available chassis in its EZBook portal:
“We could populate our portal with a bunch of chassis, but we're not going to mislead draymen with units that aren’t roadworthy. I think that's bait and switch. That's wrong, of course. I'd say Wednesday, July 5, we knew going into the four-day weekend that we're going to have some trouble. So we started overtime, at the end of June. And we ran overtime all last week, we've been running overtime this week, we're going to work again over the weekend in the entire Ohio Valley. And being fully transparent with you as well, we have a fair number of mechanics down in the Gulf. And we're kind of choking on surplus units. So we are going to shift about 250 chassis out of the Gulf up into Chicago and Ohio Valley just to give a little bit of a cushion as we work our way out of this out of service issue.”
Click on the link above for my article.
US WEST COAST: Larry Gross has a column on the US West Coast labor deal and what it means for international intermodal (IPI). He argues a recovery in US West Coast IPI began months ago. Import TEUs have been steadily increasing since February, and the share of import TEUs is also rising.
Shippers who want to avoid the rail congestion in Western Canada should consider routing cargo through Los Angeles-Long Beach, Oakland, or Seattle and transload into a 53-foot container to move on rail. Contact me if you have questions on domestic intermodal rates. People who have a Journal of Commerce Gold Subscription gain access to the Intermodal Savings Index, a robust domestic intermodal pricing matrix.
PORT OF SAVANNAH: The Georgia Ports Authority ended Sunday gate hours at the end of June. I asked GPA CEO Griff Lynch to explain the decision:
“Sunday gates have been eliminated for the time being. With volumes declining and little support form the trucking community we thought it best to cease Sunday hours. This was a ‘trial period.’ Perhaps we would reinstitute if volumes picked up in the future.”
I would only speculate — and this is pure speculation — that ocean carriers played a role in the aborted three-month trial. Perhaps ocean carriers pushed GPA to open on Sundays. Why? Because in the TCW v. Evergreen case, the Federal Maritime Commission ruled that ocean carriers cannot charge detention and demurrage when the port is closed. If the Port of Savannah is open on Sundays, then it becomes a chargeable day.
Meanwhile, keep an eye on the Berth 1 reopening in the Garden City Terminal before the end of this month.
ILA FIGHTING TOO: The International Longshoremen's Association (ILA) demonstrated this week outside the South Carolina state capitol to assert its jurisdiction over all work at the Port of Charleston and to push for the same rights at other terminal expansions such as Savannah, as Teri Errico Griffis writes.
South Carolina is unlikely to walk away from the ILA lawsuit over the Hugh K. Leatherman terminal as South Carolina is a right-to-work state. The case is before the US Court of Appeals but expect an appeal to the US Supreme Court.
JACKSONVILLE: Truckers tell us about major backups in the Blount Island terminal in Jacksonville. It’s due to higher container volumes and a construction project, causing congestion and a volume imbalance between Blount Island and Dames Point terminals. The construction project is expected to continue until the end of 2024.
YELLOW: While it appears Yellow got a reprieve from some of its lendors, I'm hearing from my sources how more shippers and receivers are getting nervous. While I won't disclose names, I've heard a few shippers and receivers who are either slashing how much business is tendered to Yellow, or are actively strategizing with 3PLs on contingency plans. As I told one shipper, I view this a lot like Hanjin Shipping in 2016. The writing is on the wall. Will Yellow survive? Maybe. Maybe not. But plan now to make sure no time sensitive or valuable freight gets stranded.
Remember, the beginnings of this issue was the Teamsters contract with Yellow. So we've got Yellow-Teamsters. We've also got concerns about a UPS-Teamsters strike at the end of the month. One name we can cross off the list is TFI International, which reached a tentative deal with the Teamsters on a new contract.
CPKC-CSX: Bill Stephens has a good column on the CPKC-CSX agreement announced late last month. Bill writes how this fulfills the vision for former Kansas City Southern CEO Mike Haverty's proposal from over 20 years ago to create a rail link with CSX Transportation.
SHUTTING DOWN: KLLM Transport is shutting its dry intermodal division within the next 45 days, a source confirmed with me. The decision isn’t surprising given the weak domestic intermodal market. KLLM owns about 500 dry boxes, which it will park. KLLM began offering dry intermodal service within the last 18 months but only had a few dozen customers. KLLM’s history is centered on temperature-controlled transportation. While KLLM is also eliminating a few low-volume reefer lanes, the source tells me it remains very much active in temperature-controlled intermodal. It owns about 1,200 reefer boxes.
DRIVER PAY: Shippers should pay attention to the driver pay issue. Yes it’s a depressed market, a pro-shipper market, but eventually the pendulum will swing and you don’t want fleets to be severely understaffed with not enough drivers. The National Transportation Institute has a list of six ways to address driver pay and employee satisfaction in a depressed market. I think these tips are equally important for fleets and shippers to know and understand.
Any opinions in this blog represent the author’s views, not the Journal of Commerce or S&P Global. Any rumors in this notebook are just that: rumors. Unconfirmed. Not news stories.
Do you have an opinion or a subject you’d like me to cover? Email me ari.ashe@spglobal.com.
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