US Intermodal Transport Congestion

Tens of thou­sands of con­tainer loads of cargo that would nor­mally move on rail­roads are being hauled on Amer­ican roads each month as com­pa­nies look to get around con­tin­u­ing sup­ply-chain bot­tle-necks. U.S. in­ter­modal transports, in which rail­roads carry con­tain­ers and truck trail­ers, were down nearly 12% in the first six weeks of this year from a year ago, ac­cord­ing to the As­so­ci­a­tion of Amer­ican Rail­roads, af­ter tum­bling in the sec­ond half of last year even as re­tail­ers and man­u­fac­turers rushed to bring in goods.

Truck­ing and rail in­dus­try of­fi­cials say de­mand to move freight 500 miles or more, which is of­ten done by rail, re­mains strong, as com­pa­nies re­stock de­pleted in­ven­to­ries. But ship­pers are more of­ten than usual choos­ing high­ways over rail­roads be­cause short­ages of la­bor, equip­ment and ware­house space across sup­ply chains can cre­ate un­pre­dictable de­lays. Rail­roads “should be seiz­ing the day and win­ning more busi­ness,” said Paul Svin­d­land, chief ex­ec­u­tive of Bensenville, Ill.-based STG Lo­gis­tics.  Mr. Svin­d­land’s firm has been plac­ing more cargo than usual on trucks be­cause he can’t find enough of the contain­ers rail­roads need to most eas­ily han­dle such ship­ments, he said.

In­ter­modal trans­port, which uses truck­ing for the fi­nal leg of de­liv­ery, is slower and more com­pli­cated than long-haul truck­ing. But it is also cheaper and less dam­ag­ing to the en­vi­ronment. Lawrence Gross, pres­ident of Gross Trans­portation Con­sult­ing, said in­ter­modal loads have lost a lit­tle over 1% of their mar­ket share to long-dis­tance truck­ing since the Covid-19 pandemic be­gan. Based on cur­rent freight vol­umes, that trans­lates to about 30,000 ad­di­tional long-dis­tance truck moves each week, he said.

John Gray, se­nior vice pres­i­dent for pol­icy and eco­nomics at the AAR, said freight rail­roads could com­fort­ably handle an ex­tra 20,000 to 30,000 in­ter­modal loads a week. “I am con­fi­dent there is a lot more ca­pacity out there,” Mr. Gray said.

 U.S. supply chains are strug­gling to in­gest record cargo vol­umes that be­gan surg­ing into the coun­try in the summer of 2020, a few months af­ter the Covid-19 pan­demic trig­gered lock­downs, when con­sumers switched their spend­ing from ser­vices to goods. Im­ports were up 14% in 2021 over the year be­fore at the na­tion’s busiest con­tainer port com­plex at Los An­ge­les and Long Beach, CA, clog­ging port ter­mi­nals, rail yards, truck yards and ware­houses.

Rail­roads car­ried record lev­els of in­ter-modal cargo to­ward the end of 2020 and through the first half of 2021. But last sum­mer, the sys­tem ground to a halt as rail yards in the Chicago area filled with tens of thousands of boxes, back­ing up ship­ments at a key hub for trans­port to des­ti­na­tions east of the Mis­sis­sippi River. Rail and trucking in­dus­try of­fi­cials say the con­ges­tion was caused by too many boxes flowing into the re­gion for ware­houses and truck­ers to han­dle, a sit­u­a­tion that has popped up in­ter­mit­tently at other in­ter­modal hubs around the coun­try.

Jim Fil­ter, chief commer­cial of­fi­cer of Green Bay, WI. based truck­ing and lo­gis­tics provider Schnei­der Na­tional Inc., said ship­ping cus­tomers took 30% longer than usual, on av­er­age, to un­load con­tain­ers last year be­cause their warehouse space was packed and they had too few work­ers. That tied up the con­tain­ers and the steel trail­ers used to pull boxes, mak­ing it harder to find equip­ment al-ready in short sup­ply.

In July, some rail­roads re­stricted cargo into Chicago for days un­til the bot­tle­necks cleared, push­ing ship­pers to truck­ing for long-distance routes to in­land ware­houses. The pe­riod co­in­cided with mas­sive bot­tle­necks at U.S. ports, where con­tainer ships at the port com­plex in South­ern Cal­i­for­nia waited weeks or months to un­load cargo.

To make up for lost time, some ship­pers chose to pay more for the cer­tainty and speed of truck­ing. Truck­load vol­umes mov­ing through the spot mar­ket on routes that mir­ror the na­tion’s busiest in­land route, from Los An­ge­les to Chicago, were up 130% year-over-year in early Feb­ruary.

Such de­mand is contribut­ing to high trucking rates. Dean Croke, DAT’s prin­ci­pal freight mar­ket an­a­lyst, said spot rates on the Los An­ge­les to Chicago routes are up 59% year-over-year. But rail­road of­fi­cials say there are signs in­ter­modal freight is be­gin­ning to bounce back. Tom Williams, group vice pres­i­dent for the con­sumer prod­ucts busi­ness unit of BNSF Rail­way, said in­ter­modal cargo vol­umes on container ships en route to the United States are up 25% com­pared with the start of the year.

 Still, of­fi­cials warn that with­out suf­fi­cient equip­ment, truck drivers, ware­house space and work­ers to process cargo, rail sys­tems could be­come clogged again. 

“We need the en­tire chain to be able to han­dle it at the same pace so we don’t get into a sim­i­lar sit­u­a­tion where the trains keep com­ing and the street and the warehouses can’t process it fast enough,” said Elise Gosch, as­sistant vice pres­i­dent of in­ter­modal sales at Union Pa­cific Corp.

by Paul Berger at WSJ