The number of freight rail delays at the Port of Los Angeles has increased to a two-year high, resulting in a buildup of both holiday and everyday items.

• The recent East and Gulf Coast strike diversions and ongoing Red Sea issues have caused container rail yards at the nation's busiest ports to become congested.
• The dwell times at Los Angeles and Long Beach ports have increased to a two-year high, despite port officials stating that operations are running smoothly.
• The chemical and retail industry executives, as well as DHL logistics firms, are expressing concerns about port rail delays and advising clients to move rail-bound freight back to the East Coast.

The congestion on the rails at West Coast ports is due to the increase in imports over the past few months, with almost half of the containers bound by freight rail out of the Port of Los Angeles waiting nine-plus days to be transported.

The average rail dwell in the San Pedro Basin, which encompasses the Port of LA and Long Beach, was four days prior to the container surges in August and September.

In September, the Port of Los Angeles recorded its best month ever with a total of 954,706 twenty-foot equivalent units moved. During the port's monthly cargo briefing on Friday, executive director Gene Seroka revealed that there are currently 20,000 rail containers waiting to be loaded out, and he is in constant communication with the railroads about the increased dwell times.

Seroka stated that the rail congestion is not affecting port operations, including vessel and trucking operations. He emphasized the importance of improving all port operations and highlighted the railroads as a key area of focus.

Seroka stated that he is closely tracking three critical factors that will influence the growth of future containers and the port's ability to handle all cargo efficiently: the early Lunar New Year, the U.S. presidential election, and the economy's current strength, as indicated by recent port volume data.

"Seroka stated that October is expected to be another strong month, with no signs of a sudden decline. The company is forecasting a range of 800,000 TEU, and the Lunar New Year is approaching early. With tariffs, there may be an increase in cargo in the early months to avoid additional costs. Unemployment claims are currently down."

If he wins the election, Donald Trump, the Republican presidential candidate, will persist in his aggressive discourse regarding new trade tariffs.

The Port of Long Beach has rail dwell times of seven days for containers, but Mario Cordero, executive director, stated that the port is not facing congestion, according to CNBC.

""The Port of Long Beach has experienced a historic number of TEUs moving through it in the last three months, and the current rail dwell is not of immediate concern, as the port is not experiencing any congestion or bottlenecks, and its operations are fluid. As a result, the port is well-positioned to receive continued record cargo given its current capacity," Cordero stated."

On-dock rail movement has seen an increase of approximately 26%, as stated by Cordero.

The Port of Long Beach recorded a 4% increase in cargo volume in September, with holiday-related products contributing to the growth.

Retail and chemicals companies concerned

Matt Shay, CEO of the National Retail Federation, stated at a holiday sales forecast briefing that retailers are meeting consumer demand and have a positive outlook on inventory levels. The National Retail Federation predicts that winter holiday spending will increase between 2.5% and 3.5% in 2023, reaching a total of $989 billion in November and December. This is consistent with their annual sales forecast. Amazon has announced plans to hire 250,000 additional workers for the holiday season, the same as last year.

Between September 1 and October 14 at the Port of Los Angeles, a global data company, Panjiva, tracked $231 million worth of products identified as "Christmas," $78 million as "Holiday," $7.6 million marked as "Hanukkah," and $755,000 as Kwanzaa. These items include household decorations, lights, trees, candles, menorahs, nutcrackers, and wreaths. Some of the companies listed with items under these categories include Home Depot, Target, and Walmart.

Besides holiday items, the containers also contain sweaters for Kohls, solar panels for BYD, and home improvement products.

The CEO of the Alliance for Chemical Distribution, Eric Byer, stated that the ports of Los Angeles and Long Beach are vital for the daily import of key chemicals from China, including citric, sulfuric, and ascorbic acids.

"ACD members are experiencing shipping delays due to increased volumes of chemicals coming into East Coast ports as a result of the strike. As a result, they are rerouting shipments to West Coast and southern U.S. ports," Byer stated.

The vice president of supply chain and customs policy at the National Retail Federation, Jon Gold, expressed concern to CNBC about the prolonged rail dwell times at West Coast ports during the peak shipping season for holiday merchandise.

"Gold stated that there has been a substantial rise in import volume through the ports in recent months. Retailers are striving to expedite the delivery of their cargo. It is imperative that all stakeholders collaborate to ensure the smooth flow of cargo and prevent any additional delays."

Freight rail lines make changes for record volumes

Union Pacific is managing double-digit international intermodal volumes from the Ports of Los Angeles and Long Beach with the help of its buffer of resources (employees, locomotives, and railcars). The Port of LA reported a 37% increase in July and 16% in August compared to 2023, while the East Coast saw a shift in traffic. To keep the supply chain fluid, Union Pacific is working with customers to temporarily manage the flow of containers into LA and Long Beach.

BNSF recorded a half-year record for on-dock volumes in the first half of 2024, and achieved one million lifts at on-dock terminals within a year at the fastest pace.

"Recently, we have encountered some difficulties beyond our control, including diverted traffic from the East and a lithium battery fire that caused the ports to shut down temporarily. These disruptions can take time to resolve, and we are doing our utmost to manage them."

To keep the entire point-to-point network running smoothly, the BNSF spokesperson stated that the network is speeding up, but it also depends on interchange partners, terminal operators, and dray providers to execute their operating plans in sync.

"BNSF has successfully managed the record volumes of cargo entering the ports due to the measures taken in advance for the busy season, such as investments made in capacity on the Southern Transcon main line between Los Angeles and Chicago, which added over 100 miles of main track and 8,000 additional parking spaces in the intermodal hubs."

The spokesperson stated that we are still departing full-length westbound trains from Chicago on schedule, even without a full load of containers, in order to get needed rail cars back to the ports. Additionally, our container yard capacity is ready at key destination facilities to unload trains.

Supply chain executives say shipping customers are worried

According to CNBC, logistics managers report that the average dwell time for a container to be unloaded from a vessel and loaded onto rail at Los Angeles and Long Beach is approximately two weeks. However, in some rare instances, dwell times can reach up to four weeks, they add.

ITS Logistics' global logistics vice president, Paul Brashier, informed CNBC that the company is sticking to its contingency plan despite the Red Sea diversions, but is taking steps to minimize potential rail problems at the port.

Due to the ongoing ILA strike and Red Sea conflict, we anticipate that diversion volumes will persist. Our most efficient and cost-effective solution for transporting our clients' freight is to bypass the initial rail terminal at the port. We retrieve the container at the port before it reaches the rail, unload the rail ocean container, and reload the freight onto a truck. This allows us to transport the freight further into our client's supply chain.

The tentative deal on wages between the ILA and East and Gulf Coast ports ownership has not yet resolved the issue of automation, which remains a sensitive topic in negotiations and must be resolved by January.

DHL Global Forwarding's head of ocean freight Americas, Geotz Alebrand, expressed concern about the extended dwell time at West Coast ports, particularly the LA port, affecting many customers.

"According to Alebrand, the main cause of the problem is the inadequate number of rail cars returning to the West Coast. This could lead to delays ranging from 5 to 15 days, depending on the terminal, the mode of transportation, and the final destination ramp."

DHL is advising clients to consider alternative strategies to mitigate these delays, one viable solution being to reroute cargo to the East Coast ports, as suggested by Goetz.

It is essential to consider longer dwell times for those with Intra-Point Intermodal (IPI) destinations, according to Goetz. Nevertheless, some customers are reluctant to make this transition due to ongoing negotiations regarding the East Coast labor contract.

Both East Coast and West Coast rails benefited from diverted rail-bound containers during Covid to avoid lengthy delays.