U.S. West Coast and Northern California Container Detention

In recent weeks, the U.S. West Coast has seen an increase in sea container detention times and a decline in the availability of rail equipment and chassis.

Warnings by port and terminal operators about increased container detention times due to a lack of rail equipment have forced them to slow the unloading of container ships.

At the Port of Long Beach, concerns are growing that with boxes spending longer in the yard before being transported inland, the terminals are running out of room for incoming cargo.



According to the Pacific Merchant Shipping Association (PMSA), the average duration of container dwell time in Long Beach increased from 3.5 days in January to 5.2 days in February. According to the Port Authority, the situation deteriorated further in March with about seven days.



The problem isn't limited to the port complexes in Los Angeles and Long Beach, but has spread to Oakland and the Northwest Seaports Alliance in Seattle and Tacoma. The root of these problems lies in the gap between import growth and existing railway equipment.

From January to February, imports reached new highs. Container throughput at major U.S. West Coast ports rose year-on-year, but railroad operator Union Pacific and the nation's second-largest railroad operator Burlington Northern Santa Fe (BNSF) are putting more Slow progress has been made in bringing train cars and locomotives to the coast. Sources say there are also signs of congestion on the inland railways.

"Major service disruptions over the past few months, particularly in Southern California and the Southern transon route through the southwest into the Central Plains, have also impacted speed and our ability to efficiently adjust resources and volumes," BNSF told clients.

The problem is exacerbated by an imbalance in U.S. trade, which has worsened in recent months. Some observers have accused railroads of being reluctant to bring empty wagons to the coast to make up for the lack of port capacity.

But there are also signs of problems within the operator, notably the availability of chassis at major rail hubs. Tight chassis supply has been a major problem in the U.S. for months.

Container liner companies and terminals have repeatedly accused importers of holding up containers longer than usual due to insufficient warehouse capacity, and they have also proposed reasonable container demurrage charges to speed up container shipments. In addition to these issues, importers are concerned that contract negotiations between terminal operators and dockworkers, which are due to begin in mid-May, could disrupt the flow of cargo through the main gateway port on the West Coast.

Forwarders and importers have diverted some of their imports from Asia to ports on the East Coast or the Gulf of Mexico. The share of U.S. West Coast container imports from Asia fell to its lowest level of 58.2% in February from 62% last year, according to IHS Markit.

Consulting firm McKinsey, in its latest report on container shipping, recommended that importers show flexibility in shipping routes, moving more through ports off the West Coast. In the long run, they should shift supply chains away from Asia Pacific.

The McKinsey report warned that even if importers on the West Coast were able to avoid severe supply disruptions, they faced the prospect of continued price increases. The report's authors expect freight rates to remain high until congestion eases. Congestion is estimated to have effectively reduced the capacity of trans-Pacific container ships by almost 25%.



McKinsey noted that import demand remains high because consumers have yet to show a shift from buying goods to consuming services and entertainment in anticipation. If current congestion levels do not fall back by the end of the year, ocean freight rates could be 25% to 50% higher than 2019 levels by 2023, the report warns.