Date: Wednesday, October 27, 2021
Union Pacific and BNSF are taking additional steps to improve the fluidity of goods and products moving inland from the West Coast ports, including offering incentives to ocean carrier customers to move containers out of the ports on the weekends.
UP (NYSE: UNP) announced Monday that it has introduced a pilot program that will offer a $60-per-container refund to ocean carrier customers for each container in-gated on Saturdays and Sundays at the Intermodal Container Transfer Facility (ICTF) in Long Beach, California. The pilot, which will run through Dec. 31, aims to encourage weekend in-gates and reduce backlog at the ports, UP said, pointing out the refund will apply to containers in-gated incremental to each customer’s current 2021 weekend average.
Gate access at ICTF also increased to 24 hours a day, seven days a week so that customers can move freight in and out, UP said. The increase in hours adds 20 weekend hours, and it supports efforts by the ports of Los Angeles and Long Beach to move to 24/7 operations.
The pilot program comes as UP on Friday said it would temporarily pause the receipt of westbound container flows into ICTF to maintain fluid operations at its near-dock ICTF facility.
“For a period of up to seven days, we have temporarily halted westbound marine container movement originating at our inland terminals to our ICTF facility in Long Beach,” UP told FreightWaves. “This supplements the actions already taken by Union Pacific to improve the flow of activity through ICTF including expanding hours of operation to 24/7, as well as incentivizing weekend ingates and outgates. Union Pacific is committed to improving fluidity throughout our network and collaborating with both the ocean carriers and the ports in this process.”
Meanwhile, BNSF (NYSE: BRK.B) said Friday that it’s offering a $50 in-gate incentive for ocean containers that in-gate on a Saturday or Sunday above a set threshold at either Los Angeles or Long Beach. “The thresholds will be unique for each carrier, based on historic in-gate patterns,” BNSF said.
“This program extension is intended to support a collaborative 24/7 supply chain operation and ongoing joint efforts to reduce the current backlog of cargo in the port complexes of Los Angeles and Long Beach. BNSF’s intermodal rail terminals are open and ready to support increased cargo as peak shipping season approaches,” BNSF said in the Friday customer notice.
Besides the incentives, UP said it has introduced other initiatives to improve supply chain flows, such as the reopening of the Global II terminal outside Chicago and the Englewood terminal in Houston as a means to provide additional inland storage capacity and shuttling freight to “less stressed terminals” within the same metroplex.
UP also said its UPGo app aims to reduce the time it takes drivers to drop off and pick up intermodal containers by helping them complete tasks such as preregistering their boxes and getting real-time parking information before they arrive. UP is also seeking to make its signage at its facilities more uniform so that it’s easier to find where things are.
In addition, UP is using drayage capacity through its LOUP subsidiary.
These efforts come as UP is “just one piece of the supply chain, situated in the middle between ocean carriers, distribution centers and drayage drivers who control the critical first and last miles,” UP said.
UP said last week that a lack of drayage drivers contributed to lower intermodal volumes in the third quarter.
“Although the middle miles remain fluid, Union Pacific believes it has a responsibility as a leading transportation company to support and facilitate fluidity at all levels of the supply chain,” UP said.
UP’s announcement on Monday and BNSF’s announcement on Friday come as the ports of Los Angeles and Long Beach said they would start assessing surcharges on ocean carriers for import containers that dwell on marine terminals. The surcharge, which has the support of President Joe Biden’s supply chain disruptions task force, is aimed at clearing the cargo off the terminals so that ships can anchor and offload their cargo.
For containers scheduled to move by truck, ocean carriers will be charged for every container dwelling nine days or more. For containers that will move by rail, ocean carriers will be charged if the container has dwelled for three days or more. The ports will charge $100 per container per day.
As these initiatives and surcharges take place, one question industry observers have is whether the warehouses and distribution centers can take the volumes that need to come their way with their existing resources and hours of operation. Getting all supply chain stakeholders to move to a 24/7 model in order to relieve the supply congestion has been one challenge.
Another challenge has been increasing chassis availability as sizable numbers of chassis, in places such as ICTF, haven’t been able to offload empty containers so that they can be available for other uses.