Hal Turner Radio Show

A Northern California logistics consultant was unable to book containers on the Burlington Northern Santa Fe (BNSF) or Union Pacific (UP) railroads for the entire first week of September going to and from U.S. West Coast ports and Midwest destinations.

The consultant said, “I have been working in the industry for thirty years and I have never seen anything like this. It’s weird.”

The result is that importers of low value products being shipped by containers such as tee shirts would be at an economic disadvantage transporting containers by truck as opposed to by rail between U.S. West Coast ports and Midwest destinations, because of the higher cost.

The consultant explained that there is a huge shortage of rail capacity: “There are no rail cars and there are no chassis.”

The consultant, who is not identified, was contracted to research container rail bookings on the UP and BNSF to and from U.S. West Coast ports including:

  • Los Angeles
  • Long Beach
  • Oakland
  • Seattle

The result of the research was that: “The railroads will not take any bookings right now and so all the containers going to and from the West Coast to places such as Chicago and Memphis must go by truck.”

The consultant cited the following trucking rates per container as examples:

  • Los Angeles/ Long Beach to Chicago: $7000.
  • LA/LB to New Berlin, Wisconsin: $6,700.
  • LA/LB to Nashville, Tennessee: $7,200.
  • LA/LB to Dallas, Texas: $5000.
  • LA/LB to Jacksonville, Florida: $8,800.

The consultant said that in the past it had been possible to truck a container coast-to-coast for $2,000: “But those days are gone.”

In addition, “In the good old days you could ship a container from the West Coast to Chicago or Memphis by rail for $1000 dollars.”

 

On August 24th, the heads of the Surface Transportation Board (STB) and the Federal Railway Administration (FRA) sent identical letters to the heads of the leading U.S. railroads, including the Union Pacific (UP) and the Burlington Northern Santa Fe (BNSF) expressing concerns about the adequacy of U.S. railroad service and the adequacy of personnel to transport freight.

The letter, signed by Federal Railroad Administrator Ron Batory and Surface Transportation Board Chair Ann Begeman read as follows:

Recently, however, we have been made aware of service issues, including missed industrial switches and excessively late or annulled trains due to crew availability issues. As you know, with both increasing intermodal and carload volumes and a projected robust harvest fast approaching, railroad employee availability, together with sufficient equipment resourcing, is essential for safe, fluid rail service in support of the nation’s economic recovery. Given the challenges related to changing demand patterns and operating conditions, increased communication and transparency with rail shippers is especially important to ensure they have the information needed to plan their businesses and meet their own customers’ needs.”

 

Certainly, there was a drastic, almost TOTAL shutdown of inbound container freight into California from China and the rest of Asia due to coronavirus, but that ended in June.  China ramped back up as did the rest of Asia, and ships have been inbound since then.  So why this trouble in September?

One source, who demanded anonymity, told me “What if the railroads were told that war is coming; that China may invade the west coast, and if they wanted any chance at all of saving their train equipment, they’d better get it out of there because it’s going to be a war zone.”