Big ship headache in San Pedro

News 1 Oct 2014 by WCN Editorial

Vessel sharing is creating a landside challenge in Los Angeles and Long Beach

𝕏

Speaking at last weeks IANA Intermodal Expo in Long Beach BNSF Executive VP and CMO Steve Bobb said bigger ships have yet to bring economies of scale for Class I railroads.

BNSF had expected bigger ships would result in consolidation of intermodal cargo but the opposite has actually been the case, at least so far, said Bobb. BNSF now has to consolidate a greater number of smaller blocks for inland train destinations than it had predicted.

From the shipping line perspective bigger ships carrying more containers lower the per-slot cost of ocean transportation, but the way lines are filling those ships is through alliances and vessel sharing arrangements.

Bobb pointed out that the Alliances are not yet consolidating services at single terminals within a port. One is putting five calls into LA and Long Beach spread across four different terminals.

Alliances and vessel sharing agreements stop at the quayside, and railroads have contracts with individual carriers, forwarders and shippers. Bigger ships and vessel sharing has had the effect of scattering BNSF's long haul intermodal business across the port complex.

Furthermore, consolidating intermodal volume to build unit trains is made harder by the fact that terminal peaks have increased along with vessel size, making it more difficult to move priority intermodal containers through terminals to on-dock and near-dock rail.

Railroads, port authorities and terminals are now grappling with how to organise the system more efficiently. Port of Los Angeles Executive Director Gene Seroka said mega ships have “changed the dynamics” of how cargo moves off the port, but shippers can not rely on lines to come up with a solution to landside issues. “We are going to have to solve it ourselves” he said.