Rail alert upped to 'red,' shippers fear more West Coast port tensions
The slowdown in International Longshore and Warehouse Union work at West Coast ports has created a congestion contagion that is spreading to the freight railroads, with uncertain consequences for the supply chain.
ITS Logistics responded to the spotty rail service by raising the Pacific Ocean region of its U.S. Port/Rail Ramp Freight Index to "Red" as a result of the issues between the ILWU and ports management, which have been locked in a battle over a new port worker contract. The West Coast ports, including Los Angeles and Long Beach, had seen an uptick in recent activity as labor talks progressed, taking back some volume from East Coast ports which had gained amid the labor tensions over the past year. But ITS now sees that shift as giving labor more leverage.
"The last two months of increased volumes have provided the ILWU leverage to affect operations at the terminals to forward their demands in talks with the [Pacific Maritime Association]," said Paul Brashier, vice president of drayage and intermodal for ITS Logistics. The PMA represents the ports in the contract negotiations. "We have moved the Pacific Ocean region to severe from elevated due to the breakdown of those talks and the subsequent shutdowns at a myriad of terminals up and down the western seaboard," he said.
The Association of American Railroads released its latest U.S. rail traffic for the week ending last Saturday, June 3, as well as volumes for May 2023, which show normal freight patterns. The latest labor issues began last Friday at The Port of Oakland, which was entirely shut down. That port processes less railroad freight compared to the ports of Los Angeles and Long Beach, which have been open with only certain terminals targeted for shutdowns.
Brashier said there is concern that inland port intermodal (IPI) freight will be hit next.
"Without a concrete resolution in sight, a lack of reliable communication from either party and the ILWU actions, shippers should stay vigilant and close to the situation on the West Coast as the situation remains extremely fluid," he said.
Source: CNBC
