News / US ports and intermodal players are geared up to handle volume surges

Los Angeles Harbor Pier 400. Photo: © trekandshoot

US container gateways and the inland intermodal chain have handled surging traffic without disruption, providing confidence that further record volumes won’t clog up the system, analysts have found.

In a session hosted by the Journal of Commerce and S&P Global, analysts put the spotlight on the intermodal system, especially flows through the container gateways in southern California.

Even this late in the year the system continues to handle elevated container volumes, observed Larry Gross, president of Gross Transportation Consulting. He noted that last week was the busiest so far in 2024 for North America – 10 weeks later than the traditional peak.

“Volumes have stayed very strong in 2024,” he said, describing the lasting high as a result of shipping activity to beat looming import tariffs and a likely second strike on the US east coast in January.

Daniel Hackett, partner in Hackett Associates and co-author of the monthly Port Tracker report, noted that US west coast gateways handled 20.7% more import cargo in the first 10 months of the year than in the same period in 2023, while the container gateways on the east and Gulf coasts registered import volume growth of 9.7% and 5.9% respectively. Overall, the Port Tracker shows an increase of 14.8% for US containerised imports this year.

From ports to the inland parts, the intermodal system has coped without problems with the elevated traffic, Mr Gross observed. “The performance generally has been resilient,” he said, adding that downstream capacity had been adequate, from drayage to warehousing and chassis availability.

He pointed out a slight weakness on the rail side, describing intermodal train speeds as “a bit below normal, but not catastrophically so”, adding that this has been offset by other metrics. Numbers for intermodal trains being held in terminals are below normal, and the number of loaded intermodal cars not moved in less than 48 hours has been below the five-year average, he said, concluding that the network is generally fluid.

The imbalance in imports and exports has been a challenge for the rail carriers, as they have to move large numbers of empty cars to the west coast. The resulting container deficit has soared to a monthly average of 14,921 this year, up from 8,189 in 2023, Mr Gross noted. In October, it reached 22,014 – the equivalent of more than three stack trains a day.

Looking ahead, US container gateways have room to grow without needing to build new facilities, said Mark Sisson, senior port planner and analyst at AECOM. On a teu-per-1,000ft-wharf basis, the port of Los Angeles handles 260,000 teu, compared with 391,000 at Vancouver, he reported. The corresponding numbers for teu-per-acre handled are 4,800 at Los Angeles and 7,800 for Vancouver.

He added that pressure on docks could be alleviated by moving containers by truck or rail to offsite locations, noting that BNSF is developing an integrated railyard, intermodal facility and warehousing on a 4,500-acre site in Barstow, connected to the LA/Long Beach port complex.

Automation – the main bone of contention in the contract negotiations between east coast port employers and labour – could usher in additional capabilities, but so far the US has shown less appetite to go down this road than expected, said Mr Sisson.

“In theory, all terminals could automate, but few have done so, and none outside southern California,” he added.

In terms of accommodating growth, the urgency is set to wane, especially on the west coast, after the surge associated with front-loading and the east coast strike runs out of steam. Mr Gross predicted that “the disconnect between torrid import growth and tepid domestic demand will end”.

And he added: “There is no reason to expect import teu growth to exceed growth in domestic truck demand in the long run.”

West coast ports will also see an easing of growth as cargo owners look more to the gateways on the east and Gulf coasts, reverting to the pattern playing out in recent years, Mr Gross predicted. West to east coast migration would resume and sourcing from China would continue to diminish, regardless of the incoming US administration, he said.

This tallies with import trends in recent years, which show a decrease in the share of traffic from China flowing through US container gateways, and a corresponding rise in traffic from ASEAN countries and, more recently, India, a development that favours east coast ports, Mr Hackett noted.

He pointed out that Houston had doubled its market share in the past 12 years, and that New York/New Jersey, Virginia and Savannah had also increased their market share.