Supply Chain Congestion Seen as Lasting 6 Months

Industry observers expect that the tangled global supply chain will take at least six months to untangle, reported Trains magazine this week on  its website.

The magazine quoted intermodal consultant Larry Gross as saying the strain on the intermodal operations is unprecedented, the worst he has seen in his 41 years in the business.

Gross spoke during a panel discussion at the Intermodal Association of North America’s annual Intermodal Expo event.

Analysts say that a flood of imports driven by an explosion in consumer spending has hindered the supply chain between Asian ports, to U.S. ports to railroad networks and their intermodal terminals.

Also driving the congestion has been the fact that retailers are struggling to keep up with consumer demand because their product inventories dipped during the early stages of the COVID-19 pandemic.

A record 59 container ships recently were reported to be anchored off the ports of Los Angeles and Long Beach awaiting berth space.

Lars Jensen of Copenhagen-based Vespucci Maritime told the panel that some of those vessels have been in San Pedro Bay for more than two weeks, delaying the unloading of more than 400,000 twenty-foot equivalent units, or TEUs, the standard measure of international containers.

Much of that cargo will eventually travel to the Midwest and Texas via BNSF or Union Pacific intermodal trains.

Rail intermodal volume has fallen by 10 percent from its May levels and is down 7 percent compared to where it was a year ago at this time.

 “What we really have here is a system starting to bog down from all the operational constraints, congestion, and lower velocity, shortage of equipment, you name it,” Gross said.

He said all links in the supply chain share some of the blame for that congestion.

One panelist, Evan Armstrong of Armstrong & Associates, said railroads are missing an opportunity to pick up business that is instead going to trucking companies.

Yet railroads say shippers have been slow to pick up their containers at intermodal terminals, particularly in Chicago, and that has had a cascading effect.

 Shippers also have been holding containers at their warehouses, which has created a shortage of chassis used to tote containers.

Tim Denoyer, vice president and senior analyst at ACT Research, said the chassis shortage is unlikely to be resolved for another six to 12 months.

Officials at Union Pacific, Norfolk Southern, and Canadian Pacific all said during the panel discussion that intermodal systems were in “disarray” around the globe.

They said their intermodal networks have capacity to handle current volumes, but only if all links in the supply chain are working relatively smoothly.

“Everything depends on speed,” said Leggett Kitchin, NS vice president of domestic intermodal. “At the current speeds, the box supply is probably tight.To the extent that we can speed up, and the street can speed up, then we’ll have capacity to grow into.”

Tags: BNSF, global supply chains, intermodal traffic, Norfolk Southern, Union Pacific