Peak season surge at U.S. West Coast ports continues
Intermodal
Peak season continues
The United States West Coast (USWC) ports continue to see a strong peak season surge. Normal seasonal demands have been supplemented by freight that was rerouted away from the east coast ports due to strike concerns. Even though the port strike was temporarily resolved, the expectation is to continue to see shippers divert freight to the West Coast until a final deal is reached.
The West Coast ports continue to be the engine of the domestic intermodal market, but it is likely that the peak weekly demand for intermodal was within the last two weeks of September. It is important to watch trade policy closely over the next several months since tariffs may lead to volumes slowing or diverting towards Mexican or Canadian ports.
Market conditions
Growth in intermodal has remained strong, primarily driven by international intermodal. Domestic intermodal volume performance is up 2.9% year over year (y/y), while international intermodal volume is up 12.2% y/y through the first three quarters of 2024. Mexico has been the bright spot for intermodal growth in 2024, with a 28.1% y/y increase through September, keeping up with the last several years of double-digit growth y/y.
While the growth in Mexico is impressive, it represents a small part of the overall North American market. The market has ample capacity, with an estimated 20–25% of container supply still stacked and ready to deploy. The only markets where we are seeing slight capacity constraints are Los Angeles and central Florida as it recovers from hurricane damage. Both markets are expected to continue to increase fluidity into November.
Pricing prospects
Increasing pricing is anticipated for the second half of 2024 and is expected to continue through 2025 in the low single-digit range. Increased labor costs from the new labor agreements combined with inflationary pressure are likely to drive rate increases further. Currently, spot market rates have stayed relatively depressed, but that may change soon. Lock in year-long pricing now before the truckload market shifts and adds even further pressure to increased rates.
Service metrics
Intermodal service, as measured by train speeds, is tracking just below the five-year average; however, there are more rail cars online than the five-year average. We are not seeing increased delays across the rail network outside of hurricane impacts. Dwell time, another common measure of service, remains under the 5-year average as well.
With strong service and low pricing, contact your C.H. Robinson account team to see how you can best take advantage of intermodal within your portfolio today.
Rail
The blank sailing program on the Asia trade lane has intensified equipment shortages at rail ramps, adding pressure to U.S./Canada exports. Delays in import containers via the Cape of Good Hope have caused significant short-term shortages of empty containers for exports. With rising demand on Trans-Pacific Eastbound and Asia–Europe lanes, carriers are repositioning many containers back to Asia, reducing availability in North America.
COSCO announced they are suspending acceptance of single 20 ft. dry van bookings from U.S. rail ramps, effective immediately. This is due to issues with finding 20 ft. pairings to get the 20 ft. containers moving. COSCO will accept 20 ft. dry van bookings made in multiples of two.
Los Angeles/Long Beach
Due to the strong increased import volume through Los Angeles/Long Beach ports, there are delays with rail. Particularly at off-dock rail connections, which require the use of a trucker and chassis to bring the containers into the port.
Port of Montreal
The indefinite strike at the Port of Montreal has significantly impacted rail movements. With the Viau and Maisonneuve terminals shut down, no rail services are being provided at these terminals. This has led to an accumulation of containers, including critical goods like pharmaceuticals and food products. The disruption is causing delays and backlogs, affecting the overall efficiency of cargo transportation through the port.
United States East Coast ports
The ILA labor union’s contract for United States East Coast (USEC) and United States Gulf Coast (USGC) ports expired on September 30, 2024. The union launched a strike on October 1, 2024, as a deal was not reached by the expiration date.
Despite recent negotiation challenges and the coast-wide strike, the business community is actively seeking government intervention to mediate a solution. This is the first labor disruption on the USEC and USGC since 1977.
Vancouver and Prince Rupert ports
Both Prince Rupert and Vancouver ports are currently involved in a labor stoppage, which will adversely impact operations. Vancouver ports are in a complete lockdown, and at present, Montréal is operating at 40% with the Viau and Maisonneuve terminals in lockdown. The potential exists for the other terminals to participate in the work stoppage out of solidarity.
Negotiations are ongoing with the British Columbia Maritime Employers Association (BCMEA). The main sticking point seems to involve semi-automated cranes operating at the DP World terminal in Vancouver.
The latest update on the Canada Industrial Relations Board (CIRB) hearings indicates that additional hearings were held in early September 2024. The CIRB is still in the process of reviewing the case, and no final decision has been announced yet.