Long delays for trains on rail networks are worrying for farmers and users of grain. Significant delays have been observed, including full trains sitting while customers waited for the grain onboard. Rails have been suffering trying to keep trains moving. Many of rails’ complaints seem to be related to the workforce. However, it isn’t clear that rails have actually reached the point where they can impact these delays.
The figures shown in the graph are marked. Norfolk Southern seems to be far and away the worst offender in delays at the origin of train service. But the delays still seem to be large.
Grain consumers and producers rely on train service to move the product. And rails have a responsibility to provide it. How can the two be gotten together?
There are some interesting statistics here about container production. The graph shows the price of new containers is dropping. Drewry estimates production this year will be somewhere around 4.5 million TEU, 70% of which is 40-foot containers. American companies are also buying 53-foot containers in China and shipping them to the US, where they are legally used on the road.
Price of new containers per TEU. Chart by Triton. Source: American Shipper.
Most containers are built in China. 80% of all new containers are built by three state-supported Chinese factories.
One of the issues no one is addressing is the buildup of ‘container waste’. So many containers are being built now because the need is in China, and it’s costly to transport the empty containers overseas. When the explosion of demand subsides, and we can see that might be starting, there will be less need for empty containers.
So where will the empty containers be? Piling up in the container yards in ports and warehouses in the US. The containers are expensive to ship back to China for reuse, particularly because of chartering costs. Adding ship capacity for empty containers is not a winner for ocean carriers when they can be built in China.
Container waste in certain locales is probably going to be a problem in places in the US where there is an excess of importing. The US does not export enough, even if we somehow increase the agricultural exports in containers, currently around 10% for some crops like soybeans. Those containers have to be stored or sold for houses or storage, or scrapped for the steel. China is ‘dumping’ steel on us again, but in the form of fabricated products— containers.
Now that land transport costs are escalating, it is starting to be costly to transfer empty containers on land in the US. That reduces the possibility of shifting them to an exporter’s location for loading.
Quite a conundrum. The container trade is bumping up against some sustainability issues other than smokestack emissions.
The problem with 24/7 operation at ports is that no one wants to pay for it. And that is despite the fact that the costs will probably wind up being added to the import cost and passed on to the shipper and customer.
It seems port executives and supply chain players differ in their view of what’s needed. Terminals and warehouse operators and perhaps even drayage firms don’t think 24-hour service is needed to relieve the current congestion. And the staffing costs of staying open 24/7 would rise, with a lot of potential dead time. It is also hard to find additional trained staff today.
Unions are resisting because they claim the port terminals and other unionized players are not willing to hire more union workers.
And the PierPass is being taken unfair advantage of; apparently some are charging higher fees for using the time slots in the hours outside normal working times. See the second article below, which claims PierPass is only incentivizing adjustments that make them more money, rather than enhancing the flow of goods.
Is it possible for port management to get control of this? It’s doubtful under the current port governance rules.
Perhaps we need even more involvement from the federal government or the FMC to get action.
Supply Chain and Logistics 