Business issues continue at the West Coast port with some rail freight bound for Los Angeles temporarily halted

Union Pacific will no longer accept exports or empty containers at its Denver rail terminal destined for the Port of Los Angeles, a preemptive move that reflects supply chain issues that have arisen due to ongoing labor issues at the West Coast port.

By pausing rail shipments, shippers can find other ports to send goods instead of having them sit for long periods in containers before reaching their intended destinations. This is critical to food and agricultural shipments, as products can spoil – the US farming industry uses mostly the West Coast for its goods.

The Port of Los Angeles is the busiest port in the country, handling $440 billion worth of freight annually. That market share has declined as more trade has moved to the East Coast over the past year, at least in part because of labor problems on the West Coast that supply chain managers have been concerned about service reliability.

These latter issues have arisen as skilled labor union workers who work on rail freight do not make it to the work halls, according to CNBC sources.

Ocean carrier CMA sent customers an email today that CNBC obtained to notify them of Union Pacific’s decision. Union Pacific did not immediately respond to a request for comment from CNBC.

Berkshire Hathaway subsidiary BNSF and Union Pacific are the rail lines that serve the West Coast ports.

“This is the ripple effect we’re concerned about,” said Paul Brashire, vice president of Drayage and intermodal at ITS Logistics. “US exports of protein and other products will start to rise in the inland ports. This will lead to a decline in rail productivity as a result of the increasing overcrowding of containers.”

CNBC has learned that negotiations between the ILWU offshore workers union and the Pacific Maritime Association (PMA) are continuing as scheduled this week. The issue of wages is still under discussion. The talks are taking place under a cloud of slow port productivity. The ILWU and PMA do not comment, citing a media blackout.

West Coast ports opened Monday after multiple closures that began at the Port of Oakland last Friday when some unionized workers refused to report for assignments. However, problems remained at select terminals within ports from Los Angeles to Seattle, with slow employment and shift closures. .

Truck drivers tell CNBC they still encounter “productive snail’s pace” at the stations. Data from various CNBC Supply Chain Heat Map data providers also shows delays.

ITS Logistics told CNBC that terminal operator Fenix ​​Marine Services, which is owned by shipping company CMA-CGM, had truck drivers turned away from them at the Port of Los Angeles during Monday’s first shift. They were selecting containers from a variety of ocean carriers. Containers processed through the terminal include those owned by Maersk, OOCL, COSCO Shipping, Sealand (a Maersk company), and Evergreen.

There are 45 large commercial vessels currently en route to Los Angeles that are expected to arrive within the next two weeks, according to tracking data from MarineTraffic, and 18 of those ships are scheduled to arrive within the next five days. Adel Ashiq, North America Head of Maritime Traffic He told CNBC that the decision to cut port productivity needs to be resolved, which is critical to avoid increasing supply chain issues that will affect both consumers and businesses.

“A decrease in labor means a decrease in the ability to operate ships and return them to the sea,” Ashiq said. “As the current situation develops, the Port of Los Angeles will experience an epidemic-like crisis as ships fill the berth, waiting to proceed to the terminal to load/unload cargo, once again causing severe congestion at one of the largest ports in the United States.”

It’s slow, logistics companies with truck drivers on the ground tell CNBC at some ports.

“We still see a lot of congestion at most stations in Los Angeles today,” Brashear said. “Drivers face long waiting times to enter stations and get served at stations.

“When our West Coast ports are unreliable, agricultural exporters become unreliable suppliers because our means of exports from the heartlands to the West Coast have to stop service,” said Peter Friedman, executive director of the Agricultural Transportation Coalition (AGTC).

In general, West Coast ports lost trade to East Coast and Gulf Coast ports. CNBC tracks container volumes at the ports of Los Angeles, Long Beach, Houston, New York and Savannah.

Container wait times outside the ports of Los Angeles, Long Beach and Oakland continue to climb. This is another physical indicator of a slow moving trade.

“Cargo backlogs at ports are expected to cause longer rail times and create disruptions within the trucking industry as drivers navigate between clearing old cargo and prioritizing higher-priority cargo,” said Gina Slagle, Project44’s senior data and marketing analyst. . “Moreover, as stations reopen after labor disruptions, there is potential for equipment shortages, specifically structure, and yard capacity limitations as they work to clear backlogs.”

Showing an example of the congestion affecting the supply chain, Ashiq highlighted the container ship MSC JEONGMIN, which was unloaded in Auckland on May 31. Depending on the waiting time for the containers to leave the port, the products in these containers are still in the port.

The majority of the items listed in the 320 brought in containers were all trade originating from Canada, which includes things like fresh apples and lentils, as well as frozen fish, poultry and meat, according to customs data analyzed by ImportGenius.

This ship was discharging products at the ports of Los Angeles, Seattle and Oakland. Products included Tesla tires, IKEA furniture, and Trader Joe’s Petite peas from Portugal. It also included hundreds of containers filled with wines from Europe, as well as porcelain tiles and granite slabs.

“The situation in the port of Auckland is not looking good,” said Ashiq. “The port is first-come, first-served, which means that ships are placed in a priority queue depending on when they arrive. What we’re seeing is a marina that hasn’t been this busy since at least March of this year, with nearly twice as many ships waiting at berth. compared to that time.”

According to MarineTraffic data as of press time, six vessels are waiting offshore and seven vessels are currently at berth. Reports of port fluidity among truck drivers is welcome news for the logistics companies called 3PLs that manage shipments for the companies.

“In Auckland, conditions have improved dramatically since last week’s lockdown, which is good because we have a backlog of import containers to haul and export to our customers,” Brashire said.

Robert Bernardo, director of communications for the Port of Oakland, told CNBC that its marine terminals are back in full operation, and that the port is “making great progress with the backlog of business from the weekend closing.”