“A major concern is the volume and duration of freight being stored on wheeled containers in the US as BCO warehouses continue to work through significant inventory levels,” Paul Brashier, vice president, drayage and intermodal for ITS Logistics, said in a company press release. “If containers are sitting on chassis, those chassis cannot be used on newly arriving containers, putting additional stress on chassis pools throughout the US—especially inland rail ramp pools. In the second quarter (Q2) and Q3, the excessive amount of box detention for containers dwelling at these drive chassis (DC) will be billed to beneficial cargo owners (BCOs) and shippers, costing shippers tens of millions of dollars per quarter.”
These charges are less than ideal given the weaker consumer demand and pressure to lower the cost of goods sold in an attempt to process the historically high inventory levels. It is expected to ripple through earnings for shippers creating further challenges in the new year. Rail service disruptions have also impacted export schedule reliability, resulting in a shortage of containers moving from ports to inland rail yards.
“We’re seeing a lack of ocean chassis equipment at inland rail ramps to process interior point intermodal (IPI) freight coming into the US,” continued Brashier. “IPI container traffic is reaching pre-pandemic levels. In addition, the booking behaviour of BCO is returning to rail ramps that are as close to DC and storage capacity as possible. This is being done to lessen transportation costs.”
The news comes just as the Federal Maritime Commission (FMC) prepares to enforce the Ocean Shipping Reform Act in the new year by conducting further investigations into carriers. Currently, the FMC is working through more than 200 complaints against carriers, as they are being denied cargo space and facing rising detention and demurrage fees. The agency saw almost $2 billion in detention and demurrage complaints in 2022, and carriers have already refunded $700,000.
“While the FMC is performing investigations to resolve the current disruption in fees, chassis and trucking providers need to actively monitor the IPI container traffic and their transportation costs,” added Brasier. “Plans should be made to reposition chassis now, as there could be significant operational constraints as we get closer to the summer and fall retail peak season.”
The ITS Logistics US Port/Rail Ramp Freight Index forecasts port container and dray operations for the Pacific, Atlantic, and Gulf regions. Ocean and domestic container rail ramp operations are also highlighted in the index for both the West Inland and East Inland regions.
Fibre2Fashion News Desk (NB)