Market Letters

US Port Terminal Congestion & Rail Delays

With vessels arriving from Asia at full capacity, the surge of imports over the last couple of months is quickly creating major bottlenecks within the Southern California port complex. Port terminal and rail dwell times began to significantly increase following the Labor Day holiday and are expected to continue to escalate. Several ports are reporting a lack of available chassis - a recipe for disaster with vessels arriving at 100% capacity for the next few weeks. For more context we provide some insights on the current situation and what to expect over the next several weeks.

Southern California Port Congestion – The Los Angeles and Long Beach terminals are operating at levels well above 90% capacity. According to the Pacific Merchant Shipping Association (PMSA) once operations exceed 80% capacity, terminal service levels start to decline. It’s being reported that containers dwell times in some cases are exceeding 5 days. We expect conditions to only worsen through October as scheduled vessels along with added extra-loaders arrive port at full capacity. Our sources advise approximately 20 extra loaders arriving in October alone into USWC ports with the majority destined into Southern California. Other major port complexes around the US are also showing an increase in congestion however most are still manageable at this time.

Dray Carriers Implement Surcharges – Due to terminal congestion, dray carriers are implementing wait time surcharges or simply rejecting delivery orders unless shippers agree on acceptance of the charges. The increase in volumes into Southern California due to e-commerce, PPE and seasonal holiday cargo rush is creating a short-term lack of driver capacity which is driving up dray costs. Shippers that are looking outside their current dray provider for help are paying significantly higher cost for loads under the current environment.

Chassis Shortages at Southern California Port Complex – As mentioned above, a chassis shortage in Southern California is an unfortunate reality with chassis turn times now averaging over 7 days. This is a 100% increase over the typical average of 3.5 days. The longer turn times coupled with vessels arriving at full capacity is quickly deteriorating the situation. These conditions will increase costs to shippers as demurrage and per-diem costs become unavoidable. Chassis shortages are not being reported at other port complexes around the country at this time. Inland rail hubs that historically face chassis shortages such as Chicago and Memphis will be closely monitored over the coming weeks.

Rail Departure Dwell Times at US & Canadian Ports Skyrocket – Container rail departure delays are once again on the rise. Containers headed to US inland hubs are experiencing delays between 10 and 15 days after discharge at Vancouver and Southern California ports. Prince Rupert port which is exclusively servicing inland rail destinations is fairing much better with dwell times averaging between 5 and 7 days. US East Coast ports are currently not reporting any significant rail delays.