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Cash Market Moves             08/02 11:18

   STB Chairman Expresses Concern Over Container Supply Chain Issues

   Container shippers are seeing serious delays at key rail container 
terminals, prompting the STB to contact Class 1 railroads.

Mary Kennedy
DTN Basis Analyst

   The global container-based supply chain serving U.S. exporters and importers 
is continuing to experience unprecedented challenges, congestion, delays and 
cost increases at virtually every step in the system: overseas and North 
American ports, railroads, shipping lines, inland rail terminals, trucking and 
warehousing, noted Specialty Soya & Grains Alliance (SSGA) in a recent 
transportation update.

   Surface Transportation Board (STB) Chairman Martin J. Oberman, on July 22, 
sent a letter to all Class I railroads expressing his concern over persistent 
problems with congestion in the international intermodal supply chain and 
significant container storage fees that some shippers are being required to pay 
in order to receive their containers.

   Shortly before the start of the pandemic there was a slowdown in the 
container industry, and still today the biggest losers continue to be the 
shippers. There were major reductions in container shipping in February 2020 
due to quarantines of port operations and manufacturing in China was halted.

   "That was followed by a rash of canceled blank sailings in March and April 
as severe cutbacks in import demand emerged, as the economic impact on global 
business operations due to the virus came to fruition," said Bruce Abbe, 
strategic adviser for trade and transportation. (A blank sailing refers to a 
sailing skipping one specific port while still traversing the rest of the 
scheduled route or the entire sailing being canceled.)

   By the time December 2020 rolled around, shippers were not seeing any 
relief, so agricultural exporters requested official action from the Federal 
Maritime Commission (FMC) to investigate denied and canceled container bookings 
(and other serious issues) that continued to cause them difficulties in 
shipping ag commodities.

   Then, in a joint letter written to President Biden on Feb. 24, 2021, the 
SSGA, Agriculture Transportation Coalition and 70 other agriculture 
associations made an urgent plea, asking for intervention into the container 
shipping crisis that has severely injured food and other U.S. ag and forestry 
exports that our international customers are depending on. 

   The latest setback came when Union Pacific and BNSF railroads took the 
industry by surprise during the week of July 18 with an announcement that they 
were temporarily suspending intermodal train service to and from UP's Global IV 
and BNSF's Logistics Park container rail yards in Chicago from the West Coast 
starting July 18. "BNSF's suspension was expected to last two weeks. As for 
UP's suspension, first reports said it was expected to last at least a week. A 
later report indicated UP would restart shipments from Global IV on a gradual 
staggered basis," noted SSGA on their website July 27.

   "The two largest container rail terminals in the Chicago area are jammed up, 
with containers and chassis packed in with no room to add more until they are 
moved out. Rail service to and from the West Coast has had volume limits on the 
number of container rail cars to Chicago for a number of weeks."

   That move prompted STB Chairman Oberman to ask that the Class I railroads 
provide certain information about the extent of congestion at key container 
terminals and their policies and practices for assessing storage charges.

   "The Board has received numerous reports related to the length of time that 
containers are being held in rail yards and the sizeable storage fees 
(demurrage) some customers have been required to pay in order to obtain release 
of containers bearing their shipments," Oberman said.

   "The Board's principal concerns are helping to mitigate the congestion 
problems at intermodal yards caused by the unprecedented economic situation; 
improve network fluidity and provide relief to shippers and receivers who are 
not in a position to reasonably avoid onerous and potentially 
business-threatening storage charges," added Oberman.

   Here is a link to the letters sent to all Class 1 railroads on July 22 by 
STB Chairman Oberman: 

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow her on Twitter @MaryCKenn

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