With Rail Strike Averted, Focus Turns to Clearing Congestion

By Augusta Saraiva (Bloomberg) —

US freight-rail companies need to turn their focus to clearing a backlog of containers at ports and at inland train terminals now that they have reached a tentative labor deal that averts the start of a strike by about 125,000 workers, the chief of Port of Los Angeles said. 

There are about 28,000 containers awaiting collection by trains at the biggest US port, a sixfold increase since February, and rail terminals in cities such as Chicago, Kansas City, Missouri, and Dallas are jammed, Executive Director Gene Seroka said. 

“Under normal conditions, that number should be zero — there’s still much more work for all of us to do with today’s announcement of the tentative agreement, everyone can now shift their focus back to the work on the ground,” he told reporters in a virtual briefing Thursday. “Getting those import containers off and into the domestic economy is key to improving rail flow at US ports.”

Almost 60% of the units for pickup have been sitting on the docks for nine days or longer, he said.  

After almost three years of negotiations, US freight railroads and unions reached a tentative deal early Thursday. Unions still must ratify the deal, but it marks a significant victory for President Joe Biden and Cabinet officials, who were deeply involved in the marathon negotiations. The agreement was reached after 20 consecutive hours of talks.  

Port of Los Angeles Starting to Feel the Pinch

Incoming container cargo to Port of Los Angeles declined 17% to about 404,000 units in August from a year earlier, the smallest amount in 2022.  

The decline reflects some diversion in cargo to East and Gulf Coast ports in order to avoid port congestion and as a possible hedge to West Coast labor-contract negotiations, Seroka said. 

Also, “consumers are getting a little bit anxious as are retailers — some with elevated inventory levels have been discounting products to have more flexibility going into the fourth quarter,” Seroka said.  

Port of Los Angeles is “ projecting lighter numbers” for September, but it’s set for the second-busiest year in its history, Seroka said. 

© 2022 Bloomberg L.P.

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